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--' II interest duri ng construct i on II (IDC). The investment cost is the sum of the capital cost, reserVI~ fund requirements, and the financing cost. -~ The cost of IDC for each year is equal to 8 percent of the costs incurred during that year plus 8 percent of costs incurred in previous years. The reserve fund is equal to one year's debt service. The financing cost is 1.5 percent of the total investment cost. The construction costs associated with the project include the costs of land, dam construction, hydropower, recreation facilities, and highway relocation. All construction costs are presented at 1988 price levels. In addition to the capital costs associated with construction, expenditures would be required for water rights and downstream storage for those two water supply scenarios that include a South Platte effluent exchange. 5.3.2 Annual Costs The annual cost of each alternative would be the cost of debt service on the bonds plus the cost of operation and maintenance (O&M). This cost would be partially offset by interest earned on the reserve fund. The debt service was assumed as repayment of bonds with an interest rate of 8 percent and a 30-year repayment period. The reserve fund earns 8 percent annual interest. The annual cost of O&M for each alternative was estimated as $2,000,000 in 1988 dollars. '- , - 5,3.3 Revenues Revenues associated with the project would result from the sale of water. Additional revenues could accrue to the Alliance from the sale of electricity; these revenues have not been determined. --' 5,4 COST OF FIRM YIELD Investment costs and annual costs of firm yield for a range of reservoir sizes were calculated for each of the four water supply scenarios in combination with each of the six highway relocation alternatives. The annual costs include debt service and O&M less interest on reserve funds. I ~ '-- 5-2