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<br />. <br /> <br />. <br /> <br />cost escalation is assumed and if no escalation is assumed. This <br /> <br />treatment is satisfactory and should be continued in the Phase II <br /> <br />report, <br /> <br />M&I Benefits <br /> <br />Evaluation of the benefits of project storage for municipal <br />. I <br />water supply purposes also involves substantial uncertainty, <br /> <br />albeit of a somewhat different form. The same issue of the <br /> <br />effect of price and demand elasticity upon future consumption <br />levels which underlies the problematic nature of future peaking <br /> <br />power demand <br /> <br />and benefit calculations <br /> <br />also underlies the <br />~ <br />However, I do hot <br /> <br />estimatiop of municipal water supply benefits. <br /><----ill ~ <br />belie~e ~twould be ~~Q~unable to ask Tudor to <br /> <br />analyze this issue <br /> <br />in Phase II, given the resources available for conducting that <br /> <br />phase of the study. <br /> <br />I believe that the questions which have been raised <br /> <br />concerning muncipal water supply benefits can be addressed <br /> <br />adequately and at little cost in Phase II by adopting a <br />sensitivity analysis approach similar to that which Tudor has <br />applied to the fuel cost escalation issue in the Interim Report, <br />In this case, municipal water supply benefits should be estimated <br />in two ways, and the differing values of their pertinent <br /> <br />evaluation criteria which result 'should be shown for each <br /> <br />alternative. The first method of benefit estimation should be <br /> <br />the alternative cost of equivalent storage, as presently included <br />in the Interim Report, However, this cost should be shown both <br /> <br />-9- <br />