HomeMy WebLinkAboutAgenda Report - November 4, 1981 (42)CITY COUNCIL
City Manager Glaves apprised the Council that at its last
ELECTS NOT TO
meeting the Commission of the Northern California Power
PARTICIPATE IN
Agency voted to participate in the first phase of the
HARRY ALLEN
Harry Allen Project being developed by Nevada Power Co.
PROJECT WITH
in southern Nevada.
NCPA
Harry Allen is a 2000 WM coal-fired generating plant
estimated to cost $3.8 billion in 1985 dollars. The
project will be composed of our 500 MW units, the first
unit presently planned to begin commercial operation in
1986. Published estimate of cost is 85.5 mills/KWH
in 1990 dollars. While this price appears very reasonable
for 1990, Utility Director Curry has analyzed the report
and believes this cost will be exceeded considerably.
According to the studies by R. W. Beck, Lodi would be
capable of using 5.1 MW of base load power out of this
project; however, these studies were based on load growth
estimates provided by Lodi prior to the Green Belt Initiative,
and prior to the announcement of the 12 MW allocation of
CVP power by W.A.P.A. The participation of Lodi in the
current phase of studies on the basis of 5.1 MW will be
$13,130.00; however tl�e Commission's action was to levy
an assessment of $27,090.00 to provide funds for partici-
pation, apIkirently anticipating costs beyond the first
defined study.
On motion of Councilman Pinkerton, Hughes second, Council
concurred that it did not wish to participate in the
4WNCIL COMMUNICAT)14N
TO THE CITY COUNat DATE NO.
FROM THE CITY MANAGER'S OFFICE November 4, 1981
SUBJECT.
Harry Allen Project
At its last meeting the Commission of the Northern California Power Agency
voted to participate in the first phase of the Harry Allen Project being
developed by Nevada Power Company in Southern Nevada.
Harry Allen is a 2000 MW coal-fired generating plant estimated to cost
$3.8 billion in 1985 dollars. The project will be composed of four 500 MW
units, the first unit presently planned to begin commercial operation in
1986. Published estimates of cost is 85.5 mills/YWH in 1990 dollars.
While this price appears very reasonable for 1990, our Utility Director
has analysed the reports and believes this cost will be exceeded considerably.
Mr. Curry is_preparing a more detailed report for the November 3, 1981
shirtsleeve session.
According to the studies by R.W. Beck, Lodi would be capable of using
5.1 MW of base load power out of this project. However, these studies
were based on load growth estimates provided by Lodi prior to the Green
Belt Initiative, and prior to the announcement of the 12 MW allocation of
CVP power by W.A.P.A. Mr. Curry's analysis will also deal with our
load projections.
The participation of Lodi in the current phase of studies on the basis of
5.1 MW will be $13,130.00. However, the Commif.sion's action was to levy
an assessment of $27,G90.00 to provide funds for participation, apparently
anticipating costs beyond the first defined study.
The enclosed copies extracted from the R.W. Beck study provide some
basic description of the project.
OVI EW OF THE HARRY ALLEN PROJECT r
This document and appendixes draws together all the significant available in-
formation on the Harry Allen Project supplied either by Nevada Power Company
(Nevada), rr Sacramento Municipal Utility District (SMUD), or produced by
R. W. Beck and Associates. No attempt is or has been made to verify or attest
to Nevada Power Company's or SMUD's supplied information.
A Nevada Power Company sponsored project estimated to deliver power at 85.5 mills
per kWh in 1990 dollars. (Refer to Sections 1 and 13 in Appendix)
Harry Allen is a 2,000 MW coal-fired generating station located 20 miles
northeast of Las Vegas, Nevada. -.In 1990, the first full year of project
operation, the estimated cost of energy delivered to NCPA members will be 85.5
mills per kilowatthour. The project includes two transmission lines to El Dorado
Station in southern Nevada, one transmissiop line from east central Nevada (White
Pine Station) to central California, and participation in a Nevada transmission
system from Midpoint Station in southern Idaho to the Harry Allen station. The
project 'also .includes 183 miles of coal slurry pipeline from Alton Coal Field
in Utah.
Based on Nevada's estimates. the Plant is to cost 3.8 billion dollars in 1985
dollars. (Refer to Sections 1 and 2 in Appendix)
The project cost estimates originally supplied by Nevada were developed by
Bechtel Corporation for January 1, 1979, and escalated to January 1, 1981. A new
project estimate supplied by Bechtel for July 1, 1981 is the estimate on which
all costs are based. Bechtel Corporation includes with these costs several dis-
claimers: (1) not site specific, (2) 9 percent escalation used to arrive at 1985
dollar estimates, (3) does not include cost of land, water or rights, (4) without
spare parts, (5) without coal handling costs and (6) without AFUDC. After adding
AFUDC and a cost for regulatory approval, the total project cost is estimated
to be 3.3 billion dollars or 1,650 dollars per kilowatt in 1985 dollars.
Possible project participants are still evaluating participation. (Refer to
Sections 3, 5, 6 and 10 in Appendix)
Both central and southern California entities are evaluating project par-
ticipation. Based on preliminary assessments of power needs, the levels of
participation are shown below. Nevada's desired levels of financial commitments
are also shown.
-1-
Preliminary Gen. ation Shares and Financing - Mebawatts
Initial
Generation Average Megawatts
Entitlement Financed By
Share - MW SCPPA CCPA NPC
Southern California Public Power Authority (SCPPA)
Central California Power Agency (CCPA)
Western Area Power Admin. - Sacramento (Western)
City of St. George, Utah (St. George)
Valley Electric Association, Nevada (Valley)
Overton Power District No. 5, Nevada (Overton)
Lincoln County Power District No. 1, Nevada (Lincoln)
City of Boulder City, Nevada (Boulder City)
Nevada Power Company (NPC)
620
620
660
660
200
200
80
40
20
87 93
20
20
340
223 37 80
2000 930 990 80
Note: Western's purchase of 200 MW will terminate at the end of year 2004 and
will be replaced by NPC purchase beginning year 2005.
Fuel is to be supplied with a 183 mile long slurry pipeline from a strip mine in
Southern Utah at a cost of $51.91 per ton excluding water cost. (Refer to Section
4 in Appendix)
Nevada directed the Morrison -Knudson Firm to perform a market search for
coal supplies for the proposed plant. Their research evaluated sources fro•n
Wyoming, Utah, Colorado, and New Mexico and the necessary transportation system.
The Alton Coal Field was determined to be the economic choice. This field,
located near Kanab, Utah, of 28,000 acres includes 350,000,000 tons of coal of which
approximately 212,000,000 tons can be surface mined. Total available tonnage is
tore than adequate for the life of the proposed plant at an average 9486 Btu per
pound for coal delivered to the plant site. The mining leases are owned by Utah
International and Nevada and it is expected that Utah International will operate
the mine. Two delivery systems were evaluated to transport the Alton Coal to
the plant. The least expensive system over the life of the project is a slurry
Pipeline 183 -miles long and 22 inches in diameter. This line is capable of de-
livering 9.1 million tons of coal per year. The plant requires approximately
6.5 million tons per year. The owners of the pipeline are as yet undetermined
M alternate delivery system is a railroad spur to the mine from the existing
Union Pacific East-West line. Several problem areas are mentioned in the Morrison -
Knudson study. The main problem is availability of water for the slurry line. The
nater is not yet under contract. Additional drilling is also recommended to prove
some of the mine and to determine the fault zones. A final note is added that the
Proposed coal mine development schedule will be difficult to meet. Estimated fuel
costs were developed including coal slurry preparr,tion cost, but without the cost
Of water. This estimated cost in 1986 dollars is $51.91 per ton. However, the
coal contract has not been negotiated.
-2-
Es
A new transmission syst will need to be constructed to transmit the energy.
(Refer to Section 11 in Appendix)
The project includes two transmission systems. One to the south to in-
terconnect into the system in southern Nevada. This southern Nevada system
appears to have interim capacity available after some new construction is com-
pleted by Southern California Edison and Los Angeles Department of Water and
Power for the White Pine and Ivanpah plants. A permanent solution requires an
alternate transmission path. Such a new path has been speculated but not studied.
Current proposals are for a new line or lines to be built from the White Pine
Generating Station located in east central Nevada to a new station in central
California. Several voltage levels have been considered and preliminary arrange-
ments are being discussed to study and develop a viable system. Such a delivery
system is necessary to allow plant participation, but at this point no firm
transmission path exists. Obviously any transmission from the east will cross
the Sierras and as yet the environmental studies have not been started nor have
the specific routes been identified. However, other projects and agencies have
produced preliminary studies. These projects and their routes are (1) Pacific
Gas and Electric's Zebra Station located in the northeast corner of Nevada with
a transmission line to Davis, California routed north of Lake Tahoe, (2) Sacra-
mento-Municipal
acra-
mento Municipal Utilities District SOFAR Project with routes located south of
Lake Tahoe, (3) Pacific Gas and Electric's Alberta Coal Project with a route
from Southern Idaho to Zebra Station and on to northern California..
Most Regulatory Approvals have been received. (Refer to Sections 12 and 13 in
Appendix)
All plant air quality permits, federal and state regulatory permission and
coal mining permits have been received. The mining approval requires that part
of the strippable portion of the mine must be mined underground. However, this is
being litigated. The southern transmission lines from McCullough or E1 Dorado
have had route approvals, but the proposed Southern California Edison Ivanpah
plant is using the same croute and the permits were issued in SCE's name. The
construction permits and regulatory approvals of the participation contracts are
still required.
Based on the proposed project Participation Agreement, the participants assume
all project risk without any project control. (Refer to Section 8 and 9 in Ap-
pendix)
Nevada has not supplied a participation agreement but maintains that the
White Pine Agreements represent the model for the Harry Allen Agreements. R. W.
Beck and Associates was instructed to review these agreements, and identify their
key elements. The important elements are the acceptance of all project risk, the
lack of project control, and the recapture of SO percent of the plant. Nevada's
proposed recapture algorithum is shown below:
-3-
Neva.,a Proposed Recapture Algorithumu
Year Unit Unit Unit Unit Uni t
1 2 3 4
2018 10 10
19 25 10 35
2020 50 25 10 85
21 90 50 25 10 175
22 90 50 25 165
23 90 50 140
24 90 90
Notes:
1) To comply with NAS 704.892, 1000 MW of Allen capacity must become
available to Nevada. The amount of recapture by NPC from SCPPA and
CCPA is 360 MW (1000 - 340 - 200 - 100) or 90 MW per unit which could
be accomplished as shown below.
2) Recapture starts in each unit's 32nd year of operation.
i
In order to keep the project on schedule Nevada has proposed an interim agreement
for a total cost of $2.65 million. (Refer to Section 14 in Appendix)
Nevada has proposed an interim agreement Which expires January 31, 1982, or
when the Participation Agreements are executed, which ever occurs first. By
executing the agreement, the required additional planning, design, and permit work
can continue allowing the project to stay on schedule. This effort is estimated
to cost $2.5 million which includes the carrying charges for Nevada's past $11
million expenditures. Appended to the interim agreement is a draft set of prin-
ciples for the Harry Allen Participation Agreements. Both of these documents
have been received and commented on by the consultant.
A cooperative effort is being pursued between several central California entities.
(Refer to Section 7 in Appendix
A cooperative effort between 1iCPA, SMUD, Turlock Irrigation District, and
Modesto Irrigation District is being pursued to share information, develop a
common financing plan, transmission plan, and negotiating stance. A discussion
agenda has been drafted and an initial meeting has been held. A Letter of
Cooperation will be issued and a steering committee is to be established.
-4-
CITY COUNCIL
JAMES A. MCCARTY. Mayor
ROBERT G. MURPHY. Mavor Pro Tern
RICHARD l HUGHES
WALTER KATNICH
JAMES W. PINKERTON. It
A
CITY OF LODI
CITY HAIL. 221 WES1 MINE STREEI
POS T Of I IC E BOX .120
LODI. CALIFORNIA 95241
(209)334-5634
November 6, 1981
HENRY A G.LAVES. Jr.
City Manager
ALICE M REIMCHE
City Clerk
RONALD M_ STEIN
City Attorney
Gail Sipple
Northern California Power Agency
770 Kiely Boulevard
Santa Clara, CA 95057
Dear Gail:
This letter will confirm action taken by the City Council
of the City of Lodi in its November 4, 1981 Council Meeting,
whereby, the Council by motion action voted not to partici-
pate in the Harry Allen Project with NCPA.
Should you have any questions regarding this action of the
Council, please do not hesitate to call this office.
AR: dg
Very truly yours,
&Iu� % .
4�
Alice M. Reimche
City Clerk
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