Vulcan Power Co..pdf

SENT BV: GREEN POWER;5413172879 ;MAR-15-02 5:20PM; PAGE 1~./ 1f PSY
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ULCA" POWIIR COMPANY
1) 83 NW Wall Street, Suite G Bend, OR 97701 [phone]
Fax Transmittal Coversheet
CONFIDENTIAL
Vulcan Fax: [phone]
. .
To: Hearings Officer. Case No. GNR-E-O2-O1 Fax Number: [phone]
Organization: Idaho Public Utility Commission
From: Steve Munson # of Pages including Cover: _....
Date: 3-15-Time: 3: 55""' .PST
MessafiZe:
Attached are the Comments of Vulcan Power Company regarding Case No. GNR-E-O2-01.
Thank YQu.
Cordially,
Steve Munson
This document is COTTsidered CONFIDENTIAL INFORMATION. If you have received this document is CITOT. pleasecall us (C()lIoct) immediately at the nwnber above and return to us by C.D. mail to the address abov~. THANK YOU.
SENT BY: GREEN POWER;5413172879 ;MAR -15 - 02 5: 20PM;PAGE 2/5
By Telefax [phone]
PostaJ Service
March 15. 2002
Idaho Public Utilities Commission
PO Box 83720
Boise, Idaho 83720-0074
RE: CASE NO. GNR-O2-O1 TN THE MAlTER OF THE INVESTIGATION OF THE
CONTINUED REASONABLENESS OF CURRENT SIZE LIMiT A TIONS FORPURPA QF PUBLISHED RATE ELiGIB1LITY (IE lMW) AND RESTRICl'IONS ON
CONTRACT LENGTH (ie 5 years) and ReQuest For Green Power Hearin2s
Dear Commissioners:
Vulcan Power Company is a geothennal baseload power developer which owns
muJlimiliioo dollar invCSbnc:IU in am Idaho geotht."IIIlal project ntted above 100 MW. We have
held the property for yS3'S with the intent of developing its many benefits for Idaho power
customers. Our efforts have been blocked by one thing. the lack of a renewable energy powermarket of scale to support our proposed 30 MW stand aJone project phases.
Indeed our ongoing ldaho power marketing effortS of thc past fivc years haveconsistently been blocked by iSC:lr ilJt~csled Idaho electric utility upposition to proj~ctS of ourtype. The Idaho utilities will not buy the power, will not even negotiate on a level playing fieldbasis. and continue to insist on building fossil and other generation which brings m~jor
environmental and economic risks aftheiI' own to Idaho.
The I MW size restriction is unduly burdensome and results in higher prices forrenewable power Lltan would result from ecol1omies of scale of larger projects. We rccormnendthat the size be increased to at least 30 M W in Idaho with the ability to develop multiple projects
of at 11:&1 30 MW at or near a given site location and green power hearings are recommended.
The year time length is unduly burdensome and results in higher prices fTom r=ncwablc
energy than would result from longer C()ntract terms. We recommend that such project contractteIm be extended to at least 12 years and preferably longer and hearings are needed.
GREEN POWER BENEFI1'S
You probably know. electric utility customers have routinel)" stated preference for clean
green power generation, particularly at remote sites which provide local jobs and other benefits.
Renewapl~$ and especially geothermal baseload power bring substantial benefitS to IdahoincludiIig acting as a hedge against over reliance on imported gas fuel and against power plant gas
fuel intel11lptions of the type encountered in the past. Indigenous renew abIes also will ~1:Opbillions of dollars of gas dollar dram from Idaho.
We have quantified the estimated economic and environmental benefits of 100 MW
new geothennal power in Idaho. The analysis is attached for your review. Idaho benefits from
100 M. W of Idaho geothermal are estimated to exceed $ 1.9 bilhon over the project life. comparedto natural gas fired generation based upon the assumptions used.
SENT BY: GREEN POWER 5413172879;MAR-15-02 5:21PMj PAGE 3/5
While other renewables may not fully match the benefits of baseload geothermal they
clearly also can add much to benefit Idaho. We respectfully request the Commission open a
formal hearings docket to consider how it may best advance the development of a thriving
renewnbles induslry in Idaho to diversifY Ole sources of power and reduce reliance on foreign fuel
soucr.cs which pollute Idaho ecosystems.
REQUEST FOR GREEN POWER HEARINGS
Progressive Idaho leadership elements have stated a desire to further local green power
sources. We agree that there is a win-win for the state. its citiuns and developers. in the long run
such a diversified power policy will also benefit the utility and its grid.
An Idaho US Senator keynoted the 290J k1ckoff of the I~o Gcotb~aJ Workil)g
Group sponsored by the US Department of Energy. Geothermal Day in Idaho waS established by
the Governor. An infrastructure of private-publjc cooperation is in place and can do much to fill
any renewab1es marketing progmm the PUC may develop. I was honored to be asked to head up
the power marketing sector of our Worldng C'JJ'oup.
We believe the PUC offers a great forum to set new poHcy. For example, in New Mexico
the PUC is dealing with the RPS, much as we hope your Commission will do. Attached is COp" ofthe moDosed 10 % RPS role at the PUC, wbich a coalit:ion of cqnSUJner pubJic interest groupsbelieve wi)) likely be implement by the PUC therc to replacc an earlier 5% RPS derailed by dcrcg
delays.
Aqioining Nevada has 190 MW of existing reliable geothermal plant.~. Those plants have
worked for over a decade and were implemented solely by progressive action a decade ago by the
Nevada PUC. The Nevada state legislature recently passed a 15 % renewable portfolio standard
because it worked so well. The PUC is an excellent forum for power policy. We asked you
f,;omidr:r widening the scope of your ,-=um:nt evaluation.
Our projects are in Idaho for the long haul. We have recently fonned 8 businessan-angement to advance clean power in ,dalto. An office and staff of experienced respected Idaho
resource developers win be annoUJ;l.ced sooo io Boise developing roral sites. Tn shOtt, we plan to
stay in Idaho and participate in what wc hope will be green power hearings designed to address
th~ ~~ck o~ an Idaho green power marker.
We look forward to further discussion and formal hearing process WIder direction of the
Commission. If the Commission or staff have questions raised by this request, please do nothesitate to contact us. Thank you for the opportunity to address the Commission on green power
for Idaho.
cc: Avisla, Pacificorp. UPL. IPC, Others
SENT BY: GREEN POWER
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5413172879 j MAR -15-02 5: 22PMj PAGE 4/5
IDAHO GEOTHERMAL BENEFITS OF
100 MW OF NEW GEOTHERMAL POWER
Estimated Operational Economic Benefit Analysis
(100 MW Average Annual Output)
Annual :aIidJ)ro ecf BenefitS.time~l:7$''Ecori6mic;fyfutf "fi~r.. t "1ft Year Benefit 30 Year Benefit
Cost x 1.75 Cost x 1.75
83.000
22S OOO $ 66 750,000
--~ --..-_
..5: 100 O,Q!$ 153 000 000
$17 150000 $ 514 SOO OOO
.,_.......... -...-.. ....... ... ...._.....
Q~!.9_
_._......,
.. $ ~08 OOQ,~90
$ 11.100.000 $ 333,000,000
Ll~~OOO --- 399 000 000
$ 55.158.000 $ 1 654,740.000
S 4 375.000 $ 131 250 000
SO 000000 150000000
$ 2 .9 533. 000
Plus: Baseload Renewable: Benefit OOO
-- ----' $
525 000 000
NOTES
(1)Substantial power plant operating costs are NOT included in tbis analysis including plant parts and
turbine work-over costs purchased from outside Idaho.
(2)Estimated project staff per 100 MW includes 1 project manager. 1 projeCt accounrartt, plus a total
7 plant operators. 7 assistant operators, 1 wellfield manager. 1 assistant wellfield manager, 2 powerplant mechanics, 2 instrument techs and. 3 laborers. Project staff at average S61,OOO/year.
(3)Dol1ar drain calculations are a placeholder based on values for Oregon-Canada exports and imports
which i"dicate a negative trade imbalance for Oregon of$870 Millio". The data indicates that. $0.of every dollar from the Oregon economy sent to Canuda to purchase natural gas fuel stays inCanada. The above values asswne 30 year average gas prices of S4.00/Mcf. 7 200 btulkwh gas
pIIIl1ts, and a 1. 7S multiplier. Gas Dollar Drain values for Idaho arc believed to be very similar.
The Clean Air Benefit consists of dollars saved by avoiding the C~. 802 and NOx emissions from
equivalent amounts of new gas-fired power. Monetization of the pollutants C()me from valuesestablished by the Oregon Public Utility CommiliSiOll and estimated cmigsion amounts are from the
Northwest Power Planning Council.
See the Estimated Capital CoSt BenefitS Analysis on the following page.
Estimated value of capacity for new renewable base1oad plant with 95% availability compared tonon-baseload.. as-available forms of power. The capacity estimate value is based upon future new
gas plant capacity price of $0.02 per k-wh.
SENT BY: GREEN POWER 5413172879 ;MAR -15 - 02 5: 22PM j PAGE 5/5
IDAHO 100 MW GEOTHERMAL POWER PLANT
Estimated Capital Cost Economic Benefit Analysis
The capital C()st of each geothermal power plant and wellfield varies nom site to site and plant to
plant. Tn a general way. tbe fim p1ant at a site is more expensive than. succeeding plants since steamfield
exploration costs and significant permitting. road upgrades and interconnect power lines to the existingtransmission grid system are costs of the first plant on a steanmeld. Followon power plants at a given
geothennal site can be less costly per unit output than the first plant as are operating expenses also somewhat
lower per unit of output.
Each plant is assumed to be a standard 30 MW plant, with 100 MW representing the output of3.33
plants. The all-in capital costs and operating expenses of 100 MW is somewhat lower per unit output than a
30 MW plant alone.
For this ana:1ysis a substmtial range of possible hypothetical Idaho capital costs is assumed for all-
100 MW project C()st including the wellfield plus the power plant, the interconnect power line and all finance
charges and developer management fees. One set, not a range of power plant operations expenses areassurn~ since the plant operations expenses, those not related to power plant debt service p3)'ments, are less
subject to variation thnn project costs.
The assumed project capital C()st range js from $1.8 mjllion per megawatt to $2.8 miBion per
megawatt. of net output. It include:, the cost of the power plant, the: stcamfie:ld costs and the finance: charg(~
and management fees associated therewith. For this generalized geothermal plant analysis, the costs are split
amongst major categories as follows.
-lOOl\'fW GEOTHERMAL PRgJECf.-,
' ,
Capital CoSt Wellfield Plant, Other Total Project
Per Me2awatt Cost Costs Cost
$ I g Milticm-65 Mimon S 115 Million $ 180 Minion
S 2.8 Million S 11 0 Million S 170 Mi1lion S 280 Million
or the $ 6S Jnillion to S 110 m.il1ion of w~llfield co~1s. it is assumed about S 13 million to $ 22
million, about 20 % of well drilling C()sts will be direct local purchase including surveying, roads, pads, sitework. water supply and non-C()ntract drilling labor. Hence Idaho drilling operations are assumed. to
contribute shout $ 13 million to S 22 mi)Jjon to the local economy. This is considered a conservative nwnber
because it does not include any impact from local salary expenditUres of contract drilling crew management
and labor while in Idaho,
Of the $ 11 million to S 170 million in plant. finSllce charges and f~s costs. it is assumed 20 % isfor payments not directly impacting the local economy. The remaining 80% of Plant, Steam gatheringpipeline and interconnect power line related costs are assumed spJit evenly between material and 1abor. 40 %each. Oftbe materia) costs. it is assumed 20 % is local procurement. Hence capital costs which comprise an
Idaho payment impacting the Idaho economy total the following amounts: $ 9.2 million to $ 13.6 million forIdaho project material8lld $ 46 million to $ 68 million for Idaho labor.
.-----:::,:,' '
Stmunary.ofCapital (:ost~xpendi~ ~:eiIefits..
, ' '. ., .
Idaho: :
" .
Wellfieldx
, .
Plant,. Plant. .Plantx'
: .
CapitalCosi:Ca
' .
tos~.~ellfie
., .
:7S.Mult-.Materla1,
. .
Labor 1.7SMul.. l
. $1.8 M/MW $ 13 M $ 22 M $ 9.2 M $ 40 M
~~,
M..._. ._~~.1.
.-",-
$ 2.8 MlMW $ 22 M $ 38 M $ 13.6 M $ 68 M $ 142 M $ 180 M