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Memorandum <br /> To: Northern Water Board of Directors <br /> From: Carl Brouwer <br /> Date: February 27,2014 <br /> Re: Granby Financial Analysis and Proposed Schedule <br /> A presentation of the Granby Hydro Project was made to the Northern Water Board of Directors <br /> at the February 14, 2014 Board Meeting. Questions were raised about the financial evaluation of <br /> the project as well as the proposed schedule. This memorandum discusses the details of the <br /> financial analysis presents the proposed schedule. A full discussion of these topics is included <br /> on the agenda for the March 6 Board Planning session. <br /> Financial Analysis <br /> Two financial scenarios were modeled for Granby Hydro. The first referred to as"Planning <br /> Scenario"takes a conservative view of the project. It assumes a higher project cost and a lower <br /> project power output. The second referred to as"Probable Scenario"assumes a more realistic <br /> view of the actual project cost and anticipated project power output. Table 1 provides a summary <br /> of assumptions used and the results for both of these scenarios as well as a comparison to the <br /> Carter Hydro. The detailed analyses for the Planning and Probable Scenarios are provided in <br /> Table 2 and Table 3, respectively. <br /> The following assumptions were used in this analysis: <br /> • Project costs were based upon CH2MHi11 estimate including quotation from Gilkes for <br /> turbine/generator/control equipment. An additional contingency above that already <br /> included in the cost estimate was applied to the total cost. The amount was 5%for the <br /> Planning Scenario and 2%for the Probable Scenario. <br /> • A CWCB loan at 2%for 30 years will be secured to pay for 90%of the project costs. <br /> CWCB will credit costs already incurred by Northern Water($300,000 to date and <br /> $200,000 more for powerhouse design)for the remaining 10%of project costs. <br /> • Mountain Parks Electric, Inc. (MPEI)will charge $2.00 per peak kilowatt(kw) output per <br /> month of actual output for a system access charge. This is reduced from their standard <br /> rate of$5.70 per kw, and substantially more favorable than the monthly Poudre Valley <br /> Rural Electric Association (PVREA) system access charge for Carter Hydro which is <br /> based upon the generators' name plate rating. <br /> • Operation and Maintenance costs estimated based on experience gained on Carter Hydro. <br /> EXHIBIT A <br />