ISER NS2 1.12 The ISER NS 1 scenario assumes no benefit from cruise ship sales and no load growth. The zero benefit to cruise ships is used because there is no agreement or certainty that the cruise ships would be purchase power. No load growth is assumed as there is no evidence to assume the load will increase. Consistent with the treatment of load growth in other applications.
The ISER NS 2 scenario assumes full sales to cruise ships, but values the sales to the cruise ships at $0.20 as stated in the application. No load growth is assumed as there is no evidence to assume the load will increase. Consistent with the treatment of load growth in other applications.
We recommend that AEA use either the ISER NS1 or ISER NS2 scenario depending on whether they believe there is enough certainty that cruise ships will buy power to justify the project.
Project Description: A 12.0-MW hydro resource located near Skagway that would feed into APC’s Upper Lynn Canal system (Skagway, Haines, and nearby small communities). Potential generation is estimated by APC to be 45 million kWh per year, but existing loads (net of existing hydro) is no where near that amount. To offset early-year losses, APC proposes to sell excess power to cruise ships in Skagway/Haines with revenues going to the State. Connelly Lake would be a storage project.
Contribution to Lower the Cost of Energy: Existing loads and hydro resources have resulted in approximately 700,000 kWh/year of diesel generation, or approximately 2.6 percent of annual requirements. Thus, while Connelly Lake would eliminate diesel generation, its effect on costs will be minimal without long-term load growth. Potential contributions to system reliability in the event of failures in the submarine cable interconnecting Skagway and Haines.
Three separate cases are run for the AEA calculation.
Loads same as Applicant (700,000 kWh core load increasing at 1 percent/year and 9 million kWh/year for cruise ship sales. (Case 437-AEA.1 with B/C = 2.02)
Core loads at 700,000 kWh/year with no load growth and 9 million kWh/year for cruise ship sales. Case 437-AEA.2 with B/C = 1.96)
Core loads at 700,000 kWh/year with 1 percent load growth and 4.5 million kWh/year for cruise ship sales. Case 437-AEA.3 with B/C = 0.94)
Diesel O&M offsets: $0.02/kWh (applied to core load only) instead of none
Generating efficiency: 13.0 kWh/gal instead of 14.26 kWh/gal
Concerns: Round II projects included a development by Skagway for power to be sold to cruise ships. If that project is developed, it would compete with Connelly Lake. Existing cruise ship traffic (at least two years ago) supported the numbers assumed (one per day during the tourist season by APC), but will this traffic hold? Case 437-AEA.3 shows economics entirely dependent on sales to cruise ships.
Reasonable to assume long-term sustainability of proposed resource. Cruise ship industry?
Infrastructure for other purposes: Road into Project but not known if it will be open to public.