WSP09376

• File Number: 8446
• Description: Cache La Poudre Platte Project
• State: CO
• Basin: South Platte
• Water Division: 1
• Date: 1/1/1989
• Title: Economic Evaluation Procedures Phase II Cache La Poudre Project Study
• Water Supply Pro - Doc Type: Report/Study

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will move in this direction, due to the influence of the buy-back

provisions of PURPA and the general trend of regulatory

authorities to strive for economically rational energy production

and consumption. But even if this change does not occur, and the

peaking power load growth necessary. to justify a Cache la poudre

peaking plant is realized, it would then be improper to calculate

benefits at the 203 mill rate used by Tudor when the power

produced is, in fact, marketed at a lower rate, This would

constitute a violation of the willingness to pay principle of

benefit estimation which is incorporated in my guidelines.

The problem of uncertainty about future peaking power demand

and price is so great and so fund.amental to estimating the

benefits of Cache la Poudre alternatives that it deserves special

attention through a simple decision analysis approach, This

approach will highlight the uncertainties, and their possible

consequences, which are involved, will provide a way of dealing

adequately with that uncertainty, and will minimize the
additional work required in Phase II.

The essence of the decision analysis approach is to
construct two scenarios .and to carry through the analysis of ea~
alternative in the context of each of those scenarios, The
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result will be an estimate of the value of each of the evaluation

criteria for each .~~._~~~_~~~~n,~E!yes~J~E-~~c~._scenario, T~
for each alternative, the expected value method will be used to
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determine the minimum outcome probability for the higher value~
of the two scenarios which would be required to produce an
expected value of the benefit-cost ratio just equal to unity,

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