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<br />I <br />I <br />I <br />I <br />I, <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />2.0 APPROACH <br /> <br />2.1 Evaluation Procedure <br /> <br />A number of past studies of pumped storage projects in Colorado have concentrated <br />on the engineering and environmental aspects of the projects. Because past <br />economic assessments typically have not used the methods employed by electric <br />utility planners, they may have lacked credibility in the utility industry. For example, the <br />economic evaluations made as part of large basin planning studies must use <br />simplified approaches consistent with prefeasibility-Ievel assessments. These <br />methods include using the cost of a single alternative thermal plant, published utility <br />avoided costs for conventional sources of electricity, or an estimated cost differential <br />between on-peak sales and off-peak purchases to determine the net value of pumped <br />storage power generation. <br /> <br />The framework of analysis used in this evaluation of pumped storage is similar to the <br />classic water resource assessment process where the economic effects of alternative <br />plans are determined by estimating the differences between future conditions with and <br />without the potential projects. Due to the unique operating characteristics of pumped <br />storage, however, detailed and reliable assessments of the true value of pumped <br />storage require the use of computer models that evaluate each utility's system and its <br />relationship to the other systems. This study used the Electric Generation Expansion <br />Analysis System (EGEAS) expansion model to simulate existing and future power <br />supply operations in Colorado and thereby determine the long-term costs that could <br />be avoided if pumped storage facilities were developed. Load projections and basic <br />model input data were selected by working closely with the TSC representatives to <br />assure that the study provided a reasonable and valid representation of current and <br />future power system operations for the utilities in Colorado. <br /> <br />Six types of generating units can be modeled in the EGEAS model. The first type is <br />thermal: nuclear, fossil, and combustion turbine units. These units are dispatched to <br />meet demand subject to mechanical outages and scheduled maintenance <br />requirements. The second type includes hydroelectric units and thermal units whose <br />output is limited by water supply, fuel availability, or emission constraints. The third <br />type consists of technologies (such as pumped storage or compressed air storage) <br />which store and discharge energy. The fourth type is nondispatchable technology <br />2-1 <br />