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<br /> <br />major factors which a developer will consider in <br />arriving at the value of a specific site. One is the <br />potential revenues which can be generated at the site, <br />the second is the total development and operational <br />cost which will be incurred. <br /> <br />On the revenue side, there is a wide range of possi- <br />bilities. Under the Public Utility Regulatory Policy <br />Act (PURPA) of 1978, utilities must agree to purchase <br />power from small scale hydro producers at what is <br />determined to be their avoided cost. Not all utilities <br />will have the same avoided cost and thus not all sites <br />will have the same revenue potential. If a utility has <br />mine mouth coal generating plants, its avoided cost <br />calculations will show a much lower buy-back rate <br />under the PURPA regulations than a utility using oil. <br /> <br />Another factor which determines the amount to be <br />paid by the utility is the extent to which they are over <br />or under their capacity to generate power in response <br />to the demand placed on their system. Because of <br />Colorado's population growth in recent years, our <br />utilities predict future demands which exceed their <br />current capacity, and are building new plants. Some <br />utilities are presently purchasing power from outside <br />the state. <br /> <br />Peaking power can command a higher avoided cost <br />rate. Therefore sites which have the capability of <br />producing peaking power will be of more value than <br />those sites which do not. <br /> <br />Thus, sites comparable in all other respects will have <br />different valued depending on the buy-back rates of <br />the utilities involved. Some additional revenue, how- <br />ever, may be possible by selling power to a utility with <br />a higher buy-back rate, or by selling power to an on- <br />site industrial user to whom the power may have a <br />higher value. <br /> <br />10 <br />