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<br />. <br /> <br />. <br /> <br />Cost of Peakin~ Power Production <br /> <br />An operational and cash flow analysis was performed for the San Miguel Canyon hydropower confIguration. <br />The operational analysis indicated a peak production rate of 180 MW and annual power production of <br />368,000,000 kWh. <br /> <br />A 2O-year cash flow analysis using 8 percent and 10 percent rates of return was utilized to estimate a range of <br />production costs for the power. The analysis indicated production costs of $0.065 per kWh and $0.075 per kWh, <br />respectively for the 8 percent and 10 percent rates of return. Power could, therefore, be produced at the site at <br />a cost of $0.075 per kWh which would cover all of the costs associated with constructing and operating the <br />facilities and provide a 10 percent return on the invesunent. This is a relatively low cost for peaking power. If <br />an estimated cost of $0.01 per kWh for transmitting the power (wheeling charge) is added to the production <br />costs, it still appears as if a hydropower installation would be able to generate net positive revenues. If the <br />power were sold for $0.01 per kWh above the estimated cost of production and wheeling, for a total cost of <br />$0.095 per kWh for a 10 percent rate of return, the annual revenue generated would be approximately $3.7 <br />million. Costs for production of peaking power of from $0.12 to $0.16 per kWh for coal fIred plants have been <br />reported in recent literature, The difference in the cost of peaking power produced by coal fIred plants above <br />the price of peaking power from the hydropower installation are avoided costs. .. <br /> <br />TABLE 3 <br /> <br />SAN MIGUEL CANYON PROJECT <br />SUMMARY OF ESTIMATED CAPITAL COSTS <br /> <br />Item <br /> <br />Millions <br />of Dollars <br /> <br />Land Acquisition <br />Access Roads <br />Lower Reservoir <br />Upper Reservoir <br />Penstocks <br />Power-Pump Plant <br />Structure <br />Turbine Generators <br />Governors and Controls <br />Plant Electrical <br />Piping and Valves <br />T esling and Initial Operation <br />Switchyard and substation <br />Transmission line <br />Subtotal <br />Contingencies 30% <br />Subtotal <br />Engineering, Administration, Legal 20% <br />Total <br /> <br />0.2 <br />13 <br />12.8 <br />4.2 <br />10.0 <br /> <br />12.0 <br />28.0 <br />35 <br />4.0 <br />6.0 <br />1.4 <br />4.0 <br />----1& <br />90.0 <br />-ill <br />117.0 <br />--..liQ <br />140,0 <br /> <br />Page 5 <br />