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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 />Optimum size and timing were determined for each utility, using the EGEAS program's <br />capability of optimizing the generation expansion plan by adding several increments <br />of the pumped storage unit. Depending on the size of the utility, increments of 25 to 75 <br />MW of pumped storage were used. It was assumed that these smaller increments <br />would be a part of a larger pumped storage project that may be shared among utilities <br />or whose additional capacity may be sold out of state. The alternative to this approach <br />would have been to use unit assumptions which are not readily available for smaller <br />pumped storage projects. This approach would. of course, penalize the larger, more <br />cost-effective projects. The 350 MW project was seen as a reasonable size <br />considering the wide range in unit sizes currently being evaluated in the state. It <br />should also be noted that all of the 25-MW additions were scheduled in the near future <br />and it was assumed that these needs could be met through inter-utility purchases of <br />existing capacity. Results are discussed in Chapter 4 of this report. <br /> <br />2.5 Sensitivity Analysis <br /> <br />Several critical assumptions consisting of load growth projections, fuel cost escalation <br />rates, size of pumped storage increments and the cost of money were made in this <br />study. With input from and concurrence of the TSC, the sensitivities of the load growth <br />assumptions were considered by testing a lower and higher rate to compare with the <br />medium load forecast used in the base case to determine how much pumped storage <br />capacity the system could support. The results of these sensitivity tests are reported in <br />Chapter 5. <br /> <br />2.6 Economics of Pumped Storage <br /> <br />The economic analysis task determined the extent to which avoided thermal costs (or <br />benefits) related to pumped storage units would support the cost of pumped storage <br />units. Fixed and variable costs that were projected throughout the life of a plant were <br />adjusted to reflect the time value of money. The cost of capital for pumped storage <br />was assumed to be 10 percent. Utility fixed charge rates were applied to all other <br />resources. The discount rate used in the present-worth analysis reflected the cost of <br />money for each utility. Using these assumptions, the relative economic feasibility of <br />the typical pumped storage unit was analyzed. The results are presented in <br />Chapter 6. <br /> <br />2-11 <br />