HomeMy WebLinkAbout1244 IPEC Gunnuk Creek Hydro1244 Gunnuk Creek Hydro Rehab
Proposer: Inside Passage Electric Cooperative
Benefit/Cost Ratio: Applicant: 3.13 Recommended: 2.50
Project Description:
Total project cost:
The total project cost is $5,715,000 excluding $80,000 in prior recon spending which is
supported by page 23 of the HDR report. This includes a 20% construction contingency and
$124,000 in Interest During Construction should interest-bearing borrowed funds be used.
Funding Requested:
$3,920,000 (the maximum REF grant allowed) is requested from AEA REF Round 9 to finance
construction; IPEC is matching $250,000 in company general funds, and will seek federal
grants/loans to secure the other $1,545,00 needed to finish the project.
Contribution to Lower the Cost of Energy:
The project is anticipated to be capable of producing 1,600,000 Kwh/ year of diesel generation,
all of which can be utilized by the IPEC system. This would reduce diesel fuel use by over
123,000 gallons per year, fuel expense by $420,397 per year, and non-fuel O&M costs by over
$43,000 per year. IPEC estimates that this will reduce IPEC system wide costs by $0.055/Kwh.
Assumptions Modified:
System Capacity - No changes made. Supported by engineering estimates.
Fuel Efficiency - No changes made. Within reasonable range.
Capital Cost - Supported by documentation. Adjusted Spend Profile to reflect schedule.
Annual O&M Cost – Adjusted non-fuel O&M savings to reflect larger gensets used by the utility.
Kwh sales – No changes made, production represents 55% of total Kake use, allowing 100% of
production to be utilized.
Concerns:
1. A land use agreement to use property the project will use is expected to be finalized in
February, 2016. It is unclear if any of the terms of the authorization will impact the
economics of the project.
Possible Enhancements:
Section 6.2.2 of the application indicates the project might be delayed should full grant funding
not be available from the REF. Investigate other financing options available to the cooperative
to avoid delaying benefits from the project.
Long-term Sustainability:
Once constructed the project should provide a reliable, cost effective energy source for the
community. IPEC is capable of ensuring the system is adequately maintained and operated.
Potential public benefits:
Environmental benefits from diesel emissions, additional economic development potential from
lower rates, although the rates will remain quite high, renewable generation supports
community and coop strategic objectives.