C150396 Feasibility Study - Laserfiche WebLink

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Financial Plan Northern Water intends to utilize the CWCB Water Project Loan Program for financing of the Granby Hydro construction. The loan would be entered into through Northern Water's existing Hydropower Enterprise. This Enterprise was created in 2011 for the Carter Hydro Project in order to obtain a loan from the Colorado Water Resources and Power Development Authority (CWRPDA). The Enterprise is presently funded solely by revenues from the Carter Hydro Power Purchase Agreement with Poudre Valley REA. CWRPDA provided a loan for$2,000,000 for Carter Hydro with the balance of $4,700,000 being a loan from Northern Water to the Hydropower Enterprise. The terms were 20 years repayment period at 2 percent interest. Since the financing of Carter Hydro, CWCB has developed a loan program as well at a rate of 2 percent. In order to make the project financially feasible, a 30-year term is necessary. At present, the CWRPDA will finance up to 20 years which results in a financially infeasible project. For this reason, Northern Water is requesting the full loan amount through CWCB. Cash Flow A summary of the project cash flows is provided in Table 3. The cash flows are based upon the following assumptions: • A 2 percent 30-year loan with the 1 percent origination fee and interest during construction rolled into the loan and the loan reserve built over the first 10 years in equal amounts. First payment would be due in the Fall of 2017. • Power Purchase Agreement with MPEI based upon the present Tri-State Generation and Transmission Policy 115 and 117 rate tables for the first ten years and Policy 115 year-10 rate frozen for the next 20 years (total of 30-year contract). These rate tables are attached. • MPEI capacity charge of$2 per kw per month. • Reclamation LOPP charge of 2 mills per kwhr escalating at 1.5 percent per year. • Operations and maintenance cost of$50,000 per year escalating at 1.5 percent per year. Two anticipated cash flows were evaluated. The first scenario entitled Planning Scenario is shown in Table 4 and provides a conservative approach to the project costs and revenues. This scenario was utilized in order to confirm that even under a slightly higher project cost and a lower amount of output, the project can break even. A conservative project construction cost of 5,250,000 was assumed for this scenario. The second scenario looks a more probable scenario with a slightly lower project cost and a higher project output and is shown in Table 5. A project cost of$5,000,000 was assumed for this scenario. The loan request is based upon the conservative Planning Scenario. 10