HomeMy WebLinkAboutFindings and Recommendations Scammon Bay Hydroelectic Project 1985ALASKA POWER AUTHORITY
Summary
FINDINGS AND RECOMMENDATIONS
SCAMMON BAY
December 5, 1985
Development of a hydroel ectri c project at Scammon Bay has been
discussed and investigated by the community and State and Federal
agencies for over six years. While once considered a feasible
project, recent economic trends and advances in diesel generator
efficiency now show that a hydroelectric project cannot compete
economically with the continued use of diesel generators to supply
the electricity needs of the community. Other energy alternatives,
including waste heat recovery and wind power generation, have been
analyzed, but none appear to have sufficient potential to justify
further feasibility studies. Continued improvement in diesel
generator and system efficiencies would benefit the community and
should be implemented.
Background and Previous Studies
Scammon Bay is a Native comTIunity with a population of approximate-
ly 300 located in the Yukon-Kuskokwim Delta region on the southwest
coast of Alaska 150 miles northwest of Bethel and 30 miles north-
east of Hooper Bay. The community is served by the Alaska Village
Electric Cooperative (AVEC) with three diesel generators (110 kW,
105 kW, and 75 kW). According to records submitted by AVEC over
the past year to the Power Cost Equalization Program, the existing
total electric load in Scammon Bay is approximately 426,000 kWh/
year. The weighted average diesel generator efficiency is current-
ly 9.5 kWh/gallon.
The Alaska Power Administration completed the Small Hydroelectric
Inventor~ of Villages Served b~ Alaska Village Electric Cooperative
in Decem er 1979, concluding, ased on initial calculations, that a
site at Scammon Bay had potentiai for hydroelectric development and
warranted further investigation. The conclusion was based on an
estimated average streamflow of 9 cubic feet per second (cfs).
Northern Technical Services and Van Gul ik and Associates, under
contract to the Alaska Power Authority, prepared a Reconnaissance
Study of Energy Requirements and Alternatives for Togiak, Goodnews
Bay, Scammon Bay, and Grayling, dated February 1981, and a "Report
Summary" for Scammon Bay dated April 1981. This study recommended
energy conservation, coll ection of wind data, continued use of
diesel generators, and further investigation of the feasibility of
a hydroelectric system. It found that the location of the power
plant was not suitable for development of waste heat recovery.
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Findings and RLJlnmendations: Scammon Bay
December 5, 1985
Page 2
The U.S. Army Corps of Engineers, Alaska District, completed its
Scammon Bay, Alaska: Small Hydropower Interim Feasibility Study and
Environmental Assessment in ~1arch 1982. It further analyzed the
energy options presented in the 1981 reconnaissance study and
conducted a deta'iled feasibil ity assessment of the hydroelectric
alternative. It 'also conducted hydrologic measurements which
showed that the actual average annual streamflow at Scammon Bay was
2.5 cfs, significantly below the value assumed in the 1979 analy-
sis. The major findings of the Corps' 1982 study were as follows:
(1) A 100 kW hydroelectric system with diesel backup would provide
the best alternative for electrical generation at Scammon Bay
with a benefit/cost ratio of 1.20.
(2) Wind power could complement the hydroelectric system by
providing an additional alternative source of energy during
winter months when hydropower potential is poor due to low
streamflows; however, additional wind data would be needed in
order to accurately assess this potential.
(3) Waste heat recovery from existing diesel generators would not
likely be feasible due to the distance between the power house
and major potential waste heat users.
(4) Improved weatherization through insulation, storm windows, and
weather stripping would provide significant savings to the
community in reduced heating costs and should be pursued to
the maximum extent possible by the community.
The Corps of Engineers proceeded with its formal approval process
in an attempt to acquire funding for the recommended hydroelectric
project. However, in May 1984, the Assistant Secretary of the Army
recommended to the U.S. Office of Management and Budget that
further expenditure of federal funds on the project was not war-
ranted and that the project should be the prerogative of local
interests. (See Appendix A, letter dated 3 May 1984.)
Current Hydropower Analysis
Upon the Corps' relinquishment of the project, the Alaska Power
Authority reviewed the 1982 feasibility study and updated its
economic analysis. (See Appendix B, memo dated September 18, 1984.)
The update analyzed the project using both Corps of Engineers and
Power Authority evaluation methods and current economic parameters.
A major difference between the evaluation methods used by the Corps
and the Power Authority is that the Corps analysis includes the
effect of local employment benefits resulting from development of
the project. The evaluation using Corps methods was performed in
the same manner as the 1982 analysis with four changes to economic
parameters: (1) all costs were updated from 1982 dollars to 1984
dollars using a 3.5% average annual inflation rate; (2) the cost of
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Findings and RE:. ,nmendations: Scammon Bay
December 5, 1985
Page 3
debt was updated from 7.875% to 8.375% (real), the standard rate
currently used by the Corps on federal projects; (3) the base price
of diesel fuel was changed from the 1982 price of $1.68/gallon to
the July 1984 price of $1.25/gallon; and (4) the fuel escalation
factor used to convert the current cost of diesel fuel to an
equivalent annual cost for the life of the project was changed from
1.74 to 1.44. Under this method of analysis, the benefit/cost
ratio of the recommended 100 kW hydroelectric project decreased
from 1.20 using 1982 prices and economic parameters to 0.79 using
the updated data.
Using Power Authority project evaluation methods and economic
parameters, a similar conclusion was reached (Appendix B). The
project was analyzed using a 3.5% real discount rate and a real
annual fuel escalation rate of 0.0% through 1988 and 3.0% from 1989
to 2005. Other assumptions were the same as those used in the
Corps analysis including the cost estimates, a 4.5% annual load
growth, and a 7 kWh/gallon diesel generator efficiency. Under
Power Authority project evaluation methods and economic parameters,
the benefit/cost ratio of the hydropower project was 0.74.
The Corps of Engineers was requested to confirm the updated analy-
ses and did so in a letter dated May 1, 1985 (Appendix C). The
Corps expanded on the Power Authority's update by reanalyzing three
sizes for the potential hydropower system (75 kW, 100 kW, and 125
kW). An update of the hydrologic analysis based on additional
streamflow data revealed greater potential for power generation
than estimated in the 1982 feasibil ity study. However this in-
creased potential was not suffi ci ent to overcome the effects of
decreased fuel prices, the increased federal-project real interest
rate, and increased diesel generator efficiencies.
The Corps' updated analysis used the January 1985 diesel fuel price
of $1.20/gallon and projected an average diesel generator efficien-
cy over the life of the project of 11 kWh/gallon. The 1982 analy-
sis was based on an average generator efficiency of 7 kWh/gallon
which did not incorporate the efficiency factor of the new 105 kW
generator installed that year. The current efficiency with the new
generator is 9.5 kWh/gallon and the Corp assumes this efficiency
will increase by two percent per year to a maximum efficiency of 13
kWh/gallon in year 2000, resulting in an average efficiency of 11
kWh/gallon over the life of the proposed project. The updated
analysis indicated benefit/cost ratios ranging from 0.70 to 0.79
depending on the size of the hydropower system.
These analyses clearly show that, using updated economic parame-
ters, a hydropower project at Scarrmon Bay is not economically
feasible. Since the completion of the updated analyses, the price
of diesel fuel at Scarrvnon Bay has continued to decline (the April
1985 price was $1.16/gallon). This price decline would cause a
further reduction in the benefit/cost ratio.
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Findings and Re __ .I1mendations: Scammon Bay
December 5, 1985
Page 4
Waste Heat Recovery and Wind Power Potential
The potential for waste heat recovery and wind power at Scammon Bay
was addressed in the Power Authority's 1981 reconna i ssance study
and was discussed in the Corps of Engineers' hydropower feasibility
study. A recent site investigation and comparative analysis with
waste heat and wind projects in other rural Alaska communities has
confirmed that the potential for these energy alternatives is
insufficient to warrant feasibility-level analysis.
The location of the power house at Scammon Bay is the major impedi-
ment to waste heat recovery. Potential customers or users of waste
heat are located too far from the power house to economically
justify installation of a waste heat recovery system.
Although wind is an abundant resource at Scammon Bay, the current
state-of-the-art of wind power technology is not capable of provid-
i ng sign ifi cant, economi ca 1 power generation for the commun ity.
The average load (50 kW) at Scammon Bay is lower than the rated
output of cost effective units now marketed. In addition, integra-
tion of a wind system into an existing diesel generation system of
this size would produce load control problems which cannot be
solved with commercially available equipment. Such integration
would require a means of handling system frequency and voltage
fluctuations and a method for maintaining synchronization or
preventing over-acceleration of induction generators. Load control
and load dumping systems designed to mitigate these effects have
not been adequately tested and approved for commerci a 1 di stribu-
tion.
Power System Efficiency
Improvements to the existing diesel generation and distribution
system to increase system efficiency appear to be the best alter-
native for reducing energy costs at Scammon Bay. AVEC is currently
making improvements and upgrades to the distribution system which
should significantly improve its efficiency by decreasing line
loss. Other improvements that would increase efficiency would be
replacement of generators when necessary with newer more efficient
models, installation of remote radiators and variable speed fans,
and assurance that power is provi ded by operati ng generators of
appropriate size to optimally meet the demand at any given time.
Recommendations
1. Discontinue any further investigations, analysis, or studies
with respect to hydroelectric development at Scammon Bay.
2. Discontinue any further investigations, analysis, or studies
with respect to the feasibi 1 ity of waste heat recovery at
Scammon Bay.
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Findings and Rt ,nmendations: Scammon Bay
December 5, 1985
Page 5
3. Discontinue further investigations, analysis, or studies with
respect to the feasibility of wind power generation at Scammon
Bay unless and until advances in technology improve the
potential for development of such systems in remote areas with
low power demand.
4. Recommend the completion of the ongoing upgrade of the distri-
bution system and the implementation of other improvements to
the diesel system that would increase overall efficiencies.
2154/517
APPENDIX A
')EPARTMENT os; THE ARMY
OFFICE OF THE ASSISTANT SECRETARY
WASHINGTON. DC 20)10
Honorable David A. Stockman
Di r ec to r
Office of Management and Budqet
Washington, D. C. 20503
Dear Mr. Stockman:
I am submitting a copy of the report of the Chief
of Engineers on Scammon Bay, Small Hydropower Project,
Alaska, together with other pertinent reports. Thes~
are furnished in accordance with Executive Order
No. 12322 dated September 17', 1981. The report has
been prepared in partial response to a Senate Public
Works Committee resolution of October 1, 1976.
Th e repo rt recommends Fed er al construe tion 0 f a
small hydropower plant at Scammon Bay, Alaska. Since
the report does not identify ~ny efficiencies to the
Nation from Federal implementation of the project, the
construction of this plant should be the prerogative
of local interests. Accordingly, we propose to advise
the Congress that the study has been completed and
that expenditure of Federal funds for further planning
or implement~tion is not warranted.
please provide information regarding the rela-
tionship of the report of the Chief of Engineers "nd
our pro posed ac tion to the prog r am of the Pr esid en t. A
proposed draft of a letter to the Congress is
enclosed.
8 Enclosures
(See ~ t tachmen t fo r
list of enclosures)
Sincerely,
1S~&lled[ ..... -~
Wil1i~m R. Gianelli
Assistant Secretary of the Army
( C i v 11 Wo r k s )
A-I
APPENDIX B I
MEMORANDUM State of Alaska
TO
THROUGH:
FROM.
/)
Orent N. Petri e O~
Acting Associate Executive
Director of Planning' '-I'
Dave Denig-Chakroff, / ,.:.../
Proj ect ~'anager '
Robert E. Harris (}AJi.--
Economi 5 t '(!IlIJl
DATE
FILE NO:
TELEPHONE NO:
SUBJECT
September 18, 1984
Scammon Bay
Economic Analysis
Comparison of the Alaska Power Authority's April 1981 Reconnais-
sance Study of Energy Requirements and Alternatives for Scamnlon Bay
with the U. S. Army Corps of Engineers (Corps) ~larch 1982 Scar.:non
Bay, Alaska, Small Hydropower Interim Feasibility Study and En-
vironmental Assessment report shows that while procedural differ-
ences exist in the composition of the economic analysis, the
proposed Scammon Bay project, under current project evaluation
parameters, is economically unfeasible. Principally, interest
rates have risen appreciably since the writing of both of these
reports, and oil prices have fallen, rather than increasing, as was
assumed would occur. To assess the impact of these actualized
conditions, we met with Dennis Wagner and Carl Borash of the Corps
to reevaluate the economic analysis based upon current data and
forecasts. Their preliminary analysis supported the findings shown
in this memorandum. This strongly suggests that the Corps might
desire to formally re-evaluate this project and re-issue its
findings based upon current and forecast economic parameters.
The following table shows the assumptions used in the Corps of
Engineers report and compares them to current data and assumptions.
Corps of Engineers Analysis Parameters
Now (1984)
Diesel Costs
Diesel Escalation Factor 1
Then (1982)
S1.68/gal.
1.74 (on-line in 1984)
$ 1.25/gal.
1.44 {on-line in 1987}
Interest Costs 2
Inflation 3
7 7/8%
N/A
8 3/8%
N/A
1. Diesel Fuel Escalation Factor represents the long-term
average expected increase in the cost of diesel fuel.
These factors are necessarily dependent upon the on-line
date of the facility under consideration.
2. Interest costs as used by the Corps are based upon an
average of long term {15+ years} bond rates.
3. Inflation is assumed to affect benefits and costs equally
and therefore is ignored in the economic analysis.
Table 4.1, Project Ccst.s and 8enefits, from pg. 27 of th~ (nrr:s
report, is shown below with the analysis perforn~d using the
updated parameters shown in the far right column.
Table 4.1
Project Costs and Benefits
First Cost 1
tl.nnua 1 (os ts
interest and AmortiZc3.tiGn 2 1
Interest During Construction
Operation and Maintenance 1
Total Annual Cost
Annual Benefits
Diesel Displacement Benefit 3
Fuel Escalation Benefits 4 1
Operation and Maintenance Benefit
Employment 5
Total Annual Benefits
Net Annual Benefits
8enefit-Cost Ratio
Assumptions
1 ) Escalated at 3.5% per year
1
(10/82)
$),483,000
120,000
3,OO(J
22,000
S 145,00('
$ 70,0(10
52,000
23,000
25,000
$ 170,000
4: 25,000 ..,
1. 2 to 1
') ,
'-i For 10/82, calculated at 7 7/8% for 50 yrs.
For 10/84, calculated at 8 3/8% for 50 yrs.
3) For 1('/82, based upon diesel cost of 51.66/9a 1 •
For 10/84, based upon diesel cost of 51.25/gal.
(fuel efficiency of 7 kWh/gal)
2
(10/84 )
1,588,000
135,000
3,200
23,500
161,700
52,700
23,200
24,600
26,800
127,300
(34,400)
0.79 tG
4) For 10/82, based upon the Corps diesel fuel escalation factor
of 1.74 (1984 on-line date)
For 10/84, based upon the Corps diesel fue1 escalation factor
of 1.44 (1987 on-line date)
5) Employment benefits are included by the Corps of Engineers to
recognize the impact of projects on economically depressed
areas. Area must show "persistent end substantial unemploy-
ment", i.e unemployment rate in local area must exceed the
national average by 100% for one of the previous two years or
by 75% for two of the previous three years, or by 50% for
three of the previous four yedrs.
5048j;'47/d2 B-2
1
Eccnomic Analysis Using Power Authority Methodology
Using the evaluation parameter of t.he Power Authority and the cost
and load growth estimates of the Corps of Engineers, the following
econCJf~';c analysis was performed.
Total Present Werth
Net l3enefits
Benefit-Cost Ratio
Assumptions
Table 1
Results of Economic Analysis
(l98~ Dc 11 a rs )
.?carnmon Bay Hydropower
3,114,000
(798,000)
0.74
The following assumptions were used in this analysis:
1) 3.5 percent real discount rate
Non-hydro
2,316,000
2) 0.0 percent real fuel escalation rate through 1988
3.0 percent real fuel escalation rate from 1989 on.
3) Construction cost estimate based on Corps of Engineers
1982 estimate of $1.48 million.
4) Electrical load growth based on Corps of Engineers 1982
report data.
5) 7 kWh/gal. fuel efficiency estimate of existing genera-
tors based upon Corps of Engineers 1982 report data.
6) Current diesel fuel price of $1.25/gallon based upon
telephone conversatior. cf 07/31/84 with Patricia
Stephenson of AVEC.
7) Hydropower project output assumed to meet 50 percent of
electrical demand on an annual basis. This assumption
was derived from figure 4.1, page 26 of the ~arch 1982
report. (230mWh i-475 mWh = 0.50)
8) Operations and Maintenance for the project ;s based upon
Corps report, with 1982 cost of $22,OOO/year, escalated
to $23,500/year in 1984.
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". '
Scammor, Bay Hydropower A 1 terr.? t i ve
PW (construction cost) 1,588,000
PW (operations & maintenance) 36H,GOG
PW (use of diesel generation 1,158,000
for 50 percent of lo?d)
Total present worth S3,114,000
Non-Hydropower Alternative
Tables 2 and 3 show tile annual cos1:~ end the toted rresent worth of
uSillg the diesel alternative ilt Scarrm0n Bay.
Table 2
Annual Costs of Diesel
(Rea 1 ) Annual Real
~1\m ~/mWh Cost Fuel Cost
8 . 5 179 85,025 1. 25
85 500 179 89,500 1. 25
86 525 179 93,975 1. 25
87 550 179 98,450 1. 25
88 575 179 102,925 1. 25
89 600 184 110,400 1. 29
90 625 190 118,750 1.33
91 650 196 127,aoo 1. 37
0" "L, 675 201 135,675 1. 41
93 700 207 14~, 900 1.45
94 725 213 154,425 1. 49
95 750 220 165,000 1. 54
96 775 227 175,9?5. 1. 59
97 800 233 186,400 1. 63
98 825 240 198,000 1.68
99 850 247 209,95G 1. 73
00 875 256 224,000 1. 79
01 900 263 i36,700 1.84
02 925 270 249,750 1.89
03 950 279 265,050 1. 95
04 975 287 279,825 2.01
5048/~47/d2 B-4
Table 3
Total Present Hcrth of Diesel
1984 85,O?5
1985 86,473
1986 87,727
1987 88,796
1988 89,693
1989 92,953
1990 96,603
1991 100,135
1992 103,003
1993 106,318
199 t1t 109,475
1995 113,016
1996 116,424
1997 119, :i84
J 998 122,320
1999 125,317
2000 129,182
2001 131,890
2002 134,456
2003 ]37,891
2004 140,630
PW (Total) = $2,316,491
The total present worth of the diesel costs, from Table 3, is
$2,316,491 (not counting 0 & M and unit replacements).
Conclusions and Recommendations
Both analysis methodologies support one conclusion: Scammon Bay is
not economically feasible at this time. The initially favorable
analyses of the project are no longer valid, due to changing
econonlic conditions, such as rising interest rates and declining
fuel costs.
As can be scen from Table 4.1 (Corps analysis methodology), the
project shows a benefit/cost ratio of less than one (.79}, even
when benefits from employment that occurs due to project
construction are considered in the analysis. From Table I, (Powcr
Authority analysis methodology) we also see that the project has a
benefit cost ratio of less than one (.74). Based upon these
findings, and subject to sir"ilar findings by the Corps in their
review, it is recommended that Scammon Eay not be considered for
hydropower development at this time.
5048/247/d2 8-5
"e:~Y TO
ATT .... TtON 011'1
APPENDIX C I
DEPARTMENT OF THE ARMY
u.s. ARMY ENGINEER DISTRICT, ALASKA
P.O. BOX 898
ANCHORAGE, ALASKA 995()6.{)898
Plan Formulation Section May 1, 1985
_RECEIVED
rvi,'; '/ 03 1935
ALASKA POWER AUTHORITY
SUBJECT: Scammon Bay, Alaska, Small Hydropower Interim Feasibility
Study
Mr. Edwin L. Morris
Associate Executive Director/Planning
Alaska Power Authority
334 West Fifth Avenue
Anchorage, Alaska 99501
Dear Mr. Morris:
Enclosed is the updated hydrologic and economic data for Scammon
Bay as you requested in your letter of February 7, 1985.
Analysis of the hydropower potential of the Scammon Bay area
using the most recent information resulted in the tentative
conclusion that a small hydropower project is not economically
feasible. Streamflows appear to be greater than originally estimated
in the 1982 Small Hydropower Interim Feasibility Study, resulting in
an increase in power generation potential. However, the dollar value
of that electrical power has decreased from the earlier study when
the present costs of diesel-generated power are applied. The costs
and benefits of the three sizes of generating systems analyzed are
shown in table 1, enclosed. The smallest size, a 75-kW system,
appeared to be the most feasible but still has a benefit-to-cost
ratio below unity, 0.79 to 1. This conclusion differs from the 1982
feasibility study, which concluded that a lOO-kW small hydropower
system was feasible and the optimum plan.
The stream record compiled since the 1982 study indicates that
the fall and early spring discharges are higher than originally
estimated (shown in table 2, enclosed). The revised streamflows
were used to compute the power generation for three different unit
sizes: 75-kW, lOO-kW, and 125-kW. Power generation increased by as
much as 53 percent for the 75-kW system. The results are shown in
table 3, along with our 1982 feasibility study results. The spring
snow melt discharges are lower than originally estimated but still
higher than the maximum power flow. Therefore, power output for
those months would not be reduced. The higher fall and early spring
discharges account for the substantial increase in power potential.
The energy benefit value used in the 1982 study was based upon
the cost of fuel and operation and maintenance costs of diesel-
generated power. Alaska Village Electric Cooperative, Inc. (AVEC)
1982 diesel costs of $1.68/gallon, coupled with Scammon Bay's
C-1
-2-
generating efficiency of 7 kWh/gallon, resulted in a fuel cost of
24.0t/kWh. AVEC's 1982 operation and maintenance cost was 6.85t/kWh.
The energy benefit value was revised according to cost of fuel and
generation efficiency data enclosed in AVEC's letter of 21 January
1985 (enclosed). The cost of fuel decreased to $1.20/gallon in
1984, and generating efficiency increased. An efficiency rate of 11
kWh/gallon and a fuel cost of $1.20/gallon was used in the most
recent analysis, resulting in a fuel cost of 10.91t/kWh. The
efficiency of 11 kWh/gal of fuel was developed by determining the
present weighted annual efficiency of 9.5, to be increased by 2
percent per year to the year 2000 (16 years), for a projected
efficiency of 13 at the year 2000. The combination of a 16-year
growth period at 2 percent and a constant period of 34 years at an
efficiency of 13 gives an average annual equivalent project
efficiency of 11. AVEC's 1984 operation and maintenance cost was
5.75t/kWh.
Project construction costs were updated to October 1984 price
levels. The interest rate was updated to 8-3/8 percent from the
1982 rate of 7-7/8 percent. Of the three sizes analyzed, 75, 100,
and 125 kW systems, the 75-kW system appears the most feasible, but
not yet economically viable. Investment costs for the 75-kW system
are $1,662,000, including $63,000 for interest during construction.
The total annual cost is $165,900, including $24,200 for operation
and maintenance. Annual benefits for the 75-kW system are $130,400,
including benefits for fuel displacement, fuel price escalation
(table 4), operation and maintenance, and employment. The benefit
to cost ratio is, therefore, $134,400/$165,900 or 0.79 to 1. Greater
detail on costs and benefits for the 75-kW system and the other
systems is given in table 1.
Questions about this information should be directed to Mr. Harlan
Legare of our Plan Formulation Section at 753-2633.
Sincerely,
(9,1 MuJ~ ~j~ Vining 1
Acting Chief, Engineering Division
Enclosures
C-2
Table 1
Costs and Benefits
Scammon Bay Small Hydropower
March 1985
Cost
f'l"r"St Costs
Interest During Construction
Investment Cost
Annual Cost
Operation & Maintenance
Total Annual Costs
(Based on 50-year project
life, amortized at 8-3/8%)
Annual Benefits
Fuel Displacement 1/
Fuel Escalation 2/-
Operation & Maintenance 3/
Employment -
Total Annual Benefits
Net Annual Deficit
Benefit/Cost Ratio
Power s{stem Size
75 kW 00 kW 125 kW
$ 1,599,000
63,000
$ 1,632,000
66,000
$ 1,677,000
70,000
$ 1,662,000 $ 1,698,000 $ 1,747,000
$ 141,700 $ 144,800 $ 149,000
24,200 24,200 24,200
$ 165,900 $ 169,000 $ 173,200
=========== =========== ===========
48,000 $
22,400
26,700
33,300
42,700 $
19,900
23,700
34,000
42,700
19,900
23,700
34,900
$ 130,400 $ 120,300 $ 121,200
=========== =========== ===========
35,500 $
.79
48,700 $
.71
52,000
.70
1/ Fuel Price $1.20/gal. with 11 kWh/gal. efficiency yielded
$.1091/kWh. Energy use = 463,538 kWh, 411,538 kWh, and 411,538
kWh for 75, 100, and 125 kWh systems respectively. Five percent
line loss assumed.
2/ Fuel escalation factor of .466 with 1985 POL date.
1/ O&M savings of approximately $.0575/kWh.
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Table 2
Average Damsite Discharge in CFS
Scammon Bay Small Hydropower
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
1982 IFS
Disc harge
0.6
0.6
0.9
5.0
10.0
6.0
2.0
2.4
2.0
1.8
0.9
0.6
1985 Revised
Discharge 1/
0.6
1.1
2.0
2.5
5.0
6.0
4.0
2.0
3.0
3.0
2.0
1.0
1/ The 1985 Revised Discharge is based upon the period of record
shown below:
Synthesized Damsite Average Monthly Discharges in CFS
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
1979
8. 1
1980
1.8
2.2
6. 1
1.5
1.2
1.2
Calendar Year
1981 1982 1983
4.7
C-4
4.2
11.8
6.9
7.4
1984
5.7
4.4
4.3
2.8
4.2
4.8
2. 1
2.8
2.2
2.2
1.1
0.6
1985
0.2
Table 3
Power Generation
Scammon Bay Small Hydropower
Power in MWh
Month 75 kW 100 kW 125 kW
Jan -0--0--0-
Feb 26 -0--0-
Mar 52 52 52
Apr 55 62 62
May 57 76 93
Jun 55 73 90
Jul 57 76 93
Aug 52 52 52
Sep 55 73 73
Oct 57 76 76
Nov 50 50 50
Dec 26 -0--0-
---------------
Revised Total 542 590 640
Previous Total 354 408 463
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R
)'
,<
Table 4
Data Resources Incorporated Escalation Rates
for Diesel Fuel Costs
Years 1982 1984 --
1980-85 .058 .016
1986-90 .045 .016
1991-95 .031 .036
1996-2000 .017 .034
2001-on .01 7 .016
Fuel Escalation Factor .084 .446
Average Annual Equivalent 1.840 1.446
Factor 1/
1/ Escalation rates applied for the first 30 years of project life
only.
C-6
APPROVAL OF FINDINGS AND RECOMMENDATIONS
FOR SCAMMON BAY
A. Action Item
Consideration and transmittal of Findings and Recommendations
with respect to hydropower feasibility and other energy
alternatives for Scammon Bay. The Power Authority recommends
continued use of diesel generators to supply the power needs
of the community and implementation of improvements that would
increase system efficiencies. The proposed hydroelectric
project is not economically feasible based on current economic
parameters, and there is insufficient potential for other
energy alternatives to warrant additional feasibility analy-
sis.
B. Background
1. The Alaska Power Administration in 1979 completed an
inventory of hydroelectric potential in AVEC villages,
concluding that Scammon Bay had good potential for
hydroelectric development.
2. Consul tants under contract to the Power Authority com-
pl eted the Reconnaissance Study of Energy Regui rements
and Alternatives for'Scarrunon Bay in April 1981, recom-
mending energy conservation, collection of wind data,
continued use of diesel generators, and investigation of
hydropower feasibility. Preparation of Findings and
Recommendat ions based on the Reconnaissance Study was
withheld pending the outcome of a hydropower feasibility
study underway by the Corps of Engineers.
3. The Corps completed its feasibility study in March 1982,
finding that a 100 kW hydroelectric project produced a
benefit/cost ratio of 1.20. The Corps recommended
development of the hydroel ectri c system and proceeded
with its formal approval process in an attempt to acquire
funding for the project. The Assistant Secretary of the
Army recommended to the U.S. Office of Management and
Budget in May 1984 that expenditure of federal funds for
the project was not warranted and that the project should
be the prerogative of local interests.
4. Upon the Corps' relinquishment of the project, the Power
Authority reanalyzed its 1981 Reconnaissance Study and
the Corps' 1982 Feasibility Study and updated their
technical and economic analyses. The Corps also updated
its hydrologic and economic analyses in May 1985. These
updated analyses incorporated current diesel fuel prices
(which had decreased significantly since 1982), lower
fuel escalation factors, an increased standard real
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interest rate used for evaluating federal projects. and
increased diesel generator efficiency factors. The
resulting benefit/cost ratios ranged between 0.70 and
0.79 dependi ng on speci fi c assumptions and hydropower
project size.
5. These Findings and Recommendations are based on the
updated technical and economic eva1uations of both the
Power Authority and the Corps of Engineers.
C. Issues
1. The Power Authority has evaluated. with updated economic
parameters, the feasibility of hydropower development at
Scammon Bay using both the method of analysis followed by
the Corps in its 1982 study and the standard Power
Authority method. Both analyses resulted in the same
conclusion that a hydroelectric project is not economi-
cally feasible based on current economic parameters.
Changes in economic parameters between 1982 and 1985
which produced the greatest effect on these results were
a significant decrease in the price of diesel fuel, a
decrease in standard fuel escalation factors, and an
increase in the standard real interest rate used in Corps
analyses of federal projects. The resulting benefit/cost
ratios ranged from 0.74 to 0.79 depending on the method
of analysis used.
2. The Corps of Engi neers was requested to reana lyze and
update its hydrologic and economic evaluation of the
project. The analysis was completed in May 1985. The
Corps found a greater hydrologic potential for power
generation than previously estimated, but this was not
sufficient to overcome the effects of lower fuel costs,
the increased federal-project real interest rate, and a
higher estimated diesel generator efficiency. The Corps
analyzed three sizes of hydropower projects resu1ting in
benefit/cost ratios ranging between 0.70 and 0.79.
3. A recent site investigation by Power Authority staff has
confirmed the findings of previous studies that waste
heat recovery is not a viable alternative at Scammon Bay
due to the distance between the power house and potential
waste heat users.
4. Recent analysis of the suitability of wind energy conver-
sion systems in small t remote villages shows that current
wind technology cannot economically meet the electricity
needs of SCal11l1On Bay. Cost effective systems in sizes
suitable for low power demands are not available, and
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equipment has not been perfected to provide adequate load
controls for small, integrated diesel/wind systems.
5. Improvements to the existing diesel generation and
distribution system appear to be the best alternative for
reducing energy costs at Scammon Bay.
D. Costs
Approval and implementation of these Findings and Recommenda-
tions would result in no cost to the Power Authority.
E. Options
1. Approve the Findings and Recommendations for Scammon Bay.
2. Modify and approve the Findings and Recommendations.
3. Disapprove the Findings and Recommendations and reassign
to staff for further analysis.
F. Recommenda t ion
Adopt Option 1: Approve the Findings and Recommendations for
Scammon Bay.
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