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Resource Evaluation The resource evaluation methodol- ogy designed to acquire the replacement resources examines the costs of resource replacement alterna- tives on both a stand-alone basis and an integrated basis, The stand-alone analy- sis, which consists of a levelized-cost screening tool, uses the costs in the supplier's proposal to determine net costs. In the context of Western's resource evaluations, the stand-alone analysis using resource screening serves two purposes. First, it provides a straightforward calcula- tion of the financial cost of each proposal to Western, through use of a levelized cost analysis. Second, in the case of longer- term acquisitions, it limits the number of proposals to be evaluated in detail to a manageable number. Integrated analysis examines the integration of the replacement resource into the interconnected power system. By including the interaction of the major regional utility systef1ls, Western will be able to accurately simulate operation of the replacement resource as it would actually be used, This approach simulates the true operation of the interconnected power system, and may result in spot market energy purchases displacing replacement resource energy at certain times, and replacement resource energy being sold on the spot market at other times, which can significantly affect the true cost of a replaceJUent resource. Western will also use transmission power flow analysis in cases where replacement resource alternatives are identified as significantly affecting key transmission paths. In general, short-term seasonal acquisitions may require only a stand- alone screening evaluation, while the full screening plus an detailed integrated analysis and evaluation would likely be used for long-term replacement resource evaluations. The integrated analysis will yield the most accurate and reliable results. This will be increasingly important to evaluate longer-term purchases. In some cases, proposals may differ significantly in qualitative (non-cost- related) characteristics. Such differences can, in some cases, be equalized by converting them to qualifications for proposals (e,g." performance bond or acceptable financial guarantee to cover liquidated damages), or the differences will be described and used to distinguish among competing proposals that have a similar levelized, per-unit cost. Costs within some tolerance (e.g., 5 percent) of the lowest cost proposal may be deter- mined to be equivalent for analytical purposes. Financial risks will be assumed by those customers purchasing replacement power, as Western cannot guarantee the availability of replacement power or its price. Although the customers purchasing replacement power will assume the financial risks, Western is in the best position to describe the relative risks associated with each potential replace- ment resource as it prepares its evalua- tions. Proof -of-Concept Analysis The methods for identifYing, evaluat- ing, and acqniring power resources to replace the useable generating capability lost at Glen Canyon Dam needed to be tested under circumstances similar to those Western may actually encounter Ii