during the planning study to hold generally for the 

 future, unless specified studies and considerations 

 indicate otherwise. Examples of the latter include 

 escalation of relative fuel cost (e.g., due to increas- 

 ing scarcity) or increased capital costs expected to 

 result from changed environmental or safety crite- 

 ria. Fuel costs used in the analysis should reflect 

 economic prices (market clearing) rather than regu- 

 lated prices. 



(b) Compute benefits of nonstructural measures. 

 Compute the average annual benefits of nonstruc- 

 tural measures, based on the cost of the most 

 likely alternative identified above, except as speci- 

 fied in 2.5.2(b). 



2.5.9 Evaluation procedure: Data sources. 



Data on existing and planned resources, loads, 

 marketability criteria, and alternative costs are avail- 

 able from various agencies and groups, including 

 the Department of Energy, NERC regional councils, 

 FERC regional offices, Federal power marketing ad- 

 ministrations. State energy agencies, utility compa- 

 nies, and regional planning groups. If specific oper- 

 ating characteristics of individual plants are not 

 available, generalized data can be obtained from 

 other sources, including the Electric Power Re- 

 search Institute. Load-resources models based on 

 simulated system operation may be used if availa- 

 ble. Some of these models are available from var- 

 ious sources, including FERC, Federal power mar- 

 keting administrations, and a number of consulting 

 services. 



2.5.10 Alternative Procedure: Financial 

 Evaluation. 



(a) General. This section provides an alternative 

 hydropower benefit evaluation procedure that may 

 be used for evaluating single-purpose projects that 

 are to be 100 percent nonfederally financed, pro- 

 vided that there are no significant incidental costs. 

 This approach employs market data based on long- 

 run (10 or more years) utility wholesale prices as an 

 estimate of the cost of producing equivalent power 

 from the most likely alternative. These prices may 

 be used to evaluate and compare the financial 

 feasibility of alternative plans, provided that they 

 are consistently applied to all of the alternatives. 

 The formulation of alternative plans under this pro- 

 cedure is subject to the provisions of Chapter I, in- 

 cluding evaluation of incidental benefits and costs, 

 compliance with environmental laws, and inclusion 

 of appropriate mitigation. Through this process, the 

 most financially attractive alternative is identified. 

 Because the benefits and costs of all alternative 

 plans are evaluated in a consistent way, the most 



financially attractive plan can be identified as the 

 NED plan. 



(b) Industry long-run wholesale prices. The 

 market approach must be carefully applied to 

 ensure that the long-term (10 or more years) con- 

 tract prices reflect the energy and capacity charac- 

 terisitics of the proposed hydropower project. In 

 screening contracts for aprlicability, a number of 

 factors should be examined, including: term of con- 

 tract, power and energy availability (daily, weekly, 

 seasonally), geographic relationship, delivery volt- 

 age, power factor, point(s) of delivery (busbar, high 

 voltage grid, load center), interconnecting facilities, 

 reliability standards and emergency backup. Infor- 

 mation on long-term wholesale power contracts 

 may be obtained from the Federal Energy Regula- 

 tory Commission, State public service commissions, 

 the Federal power marketing administrations, and 

 electric generating and distribution utilities. 



2.5.11 Report and display procedures. 



(a) Tables 2.5.11-1 through 2.5.11-3 are sug- 

 gested for presentation for reports that include fed- 

 erally financed hydropower measures. Table 

 2.5.11-1 summarizes the output of all plans by 

 peaking capacity and system load factor, and pre- 

 sents the costs of each alternative plan. Tables 

 2.5.11-2 and 3 summarize the output of the struc- 

 tural component of each alternative, the benefits of 

 the structural components, and the resource costs 

 of all structural and nonstructural components of 

 each alternative plan. The number of benefit cate- 

 gories included will vary from project to project. Not 

 all projects will have intermittent capacity, for exam- 

 ple, and in some cases it will be appropriate to ac- 

 count separately for firm and secondary energy. 

 System energy costs are sometimes included in the 

 unit energy values; in those cases such costs 

 would not have to be accounted for separately. 



(b) Table 2.5.11-3 is suggested if the nature or 

 magnitude of hydropower benefits changes sub- 

 stantially over time. Examples are: staged construc- 

 tion of the hydropower project; change in the role 

 of hydropower in the system over time; and situa- 

 tions in which several years are required to absorb 

 a large project into the system. 



(c) When the alternative financial evaluation pro- 

 cedure is used to evaluate financial feasibility of 

 plans that are to be 100 percent nonfederally fi- 

 nanced (see Section 2.5.10), physical data similar 

 to that found in tables 2.5.11-1 through 3 should 

 be displayed. Capacity and energy values, as devel- 

 oped through the financial analysis, should also be 

 displayed in a manner facilitating comparison 

 among alternatives. These displays are in lieu of 



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