C150396 Increase Approval Letter

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Northern Colorado Water Conservancy District Agenda Item 28b November 19-20,2014 Board Meeting (Updated November 21,2014) Page 3 of 5 The CWCB will delay the Loan's close-out date for at least one year after the Project's substantial completion date. This will allow the Enterprise to make the required payment for Interest accrued During Construction (IDC) after one year of power generation. Borrower - Northern Water Hydropower Water Activity Enterprise The Enterprise is a government-owned business within the meaning of Article X Section 20(2)(d) of the Colorado Constitution, organized pursuant to C.R.S. 37-45.1-101 et seq. and owned by the Northern Colorado Water Conservancy District. The Enterprise was established in 2011 for the purpose of acquiring, constructing, operating, and maintaining hydropower plants; and generating, distributing, selling or contracting to sell electric energy. The governing body of the Enterprise is the District's Board of Directors. The District is a quasi-municipal entity and a political subdivision of the state of Colorado organized under the Water Conservancy Act, C.R.S. 37-45-101 et seq. The District was created by decree of the Weld County District Court, dated September 20, 1937. In accordance with its Repayment Contract with Reclamation, the District collects a 1.00 mill levy property tax on real property located within its boundaries. These taxes are assessed by the individual counties and submitted to the District. In addition, the District collects water assessments from water allotment contract holders. The District has the authority to generate, distribute, sell, or contract to sell electric energy at wholesale rates through the operation of its facilities. The electric power may be used both within and outside the boundaries of the District (C.R.S. 37-45-118(2)). Project Feasibility Carl Brouwer, P.E., of the District prepared the Loan Feasibility Study, titled "Granby Hydro Project Loan Feasibility Study," dated April 1, 2014. The Study was prepared in accordance with CWCB guidelines and includes preliminary engineering, an engineer's estimate of probable cost that were used in determination of the total Project cost, and two years of audited financial statements. The District also submitted a supplemental report prepared by CH2MHill, titled "Feasibility Design Report Granby Hydropower Project," dated August 2011. Project Revenues and Expenses The Project is designed to generate 4,800,000 to 5,000,000 kilowatt-hours per year. Therefore, revenues are projected to be approximately $350,000 to $390,000 annually. Project expenses include a Mountain Parks Electric, Inc. capacity charge of $2 per kilowatt per month ($13,000 annually), Reclamation LOPP charge of 2 mills per kilowatt-hour (beginning at $11,774 annually and escalating at 1.5% per year) and operations and maintenance estimated at $50,000 annually (escalating at 1.5% per year). The Granby Hydropower LOPP term is 40 years from the time power generation begins. Payment is made annually to Reclamation based upon the capacity of the site and the kilowatt-hours produced.