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<br />..~ <br /> <br />. <br /> <br />. <br /> <br />~ <br /> <br />Tudor Engineering <br /> <br />Page 7 <br /> <br />against the hydropower project, which also carries risks, whether or not <br /> <br /> <br />they are self-insured. You may include a risk premium in the costs of <br /> <br /> <br />every option, or you may omit such a premium from the costs of every <br /> <br />option, on the grounds that it is a matter of detail which need not be <br /> <br /> <br />included in a preliminary study. You may not, however, include it in the <br /> <br /> <br />costs of some options but not in others. Finally, the charge for taxes <br /> <br /> <br />should be excluded from the costs of all options. Taxes are simply <br /> <br /> <br />transfer payments, not real resource costs, from an economic perspective, <br /> <br /> <br />and they should not be included in any economic efficiency calculation for <br /> <br /> <br />this reason. <br /> <br />Evaluation Criteria <br /> <br />The Interim Report, in response to my guidelines, included project <br />costs as one of the evaluation criteria. My subsequent guidelines for <br />project costing, which I have furnished to you, have superceded this <br />original requirement. Please follow those recent guidelines rather than <br />the earlier discussion of the project cost criterion in preparing the Phase <br />II report. <br />