Economics Review of Restoring Hydropower At Enloe Dam

From:

Columbiana, Rocky Mountain Econometrics

 

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Reports Published   7/1/2016

This 2016 report is the 3rd Review of the Economics of Restoring Hydropower at Enloe Dam on the Similkameen River: Analysis of the Public Utility District No.1 of Okanogan County’s Final License Application for Federal Energy Regulatory Commission Project No. 12569, conducted by Rocky Mountain Econometrics on behalf of Columbiana.

The review follows up on economic analyses conducted in 2011 and 2014, and outlines three possible future cost scenarios for the project. The least restrictive future for Enloe Dam assumes that the cost of construction is $39 million ignores pre-construction “sunk cost” spending, and assumes that aesthetic flow requirements will be as lenient as possible. Under this scenario, power produced by Enloe Dam will cost about $83 / MWH. This is more than double the price of power on the open market.

The next scenario assumes that the cost of construction remains $39 million, includes a 10/30 cfs aesthetic flow and $14.4 million in preconstruction “sunk cost” spending by the end of 2016. Under this scenario, the cost to produce power at Enloe Dam will be about $110 / MWH. If this scenario proves accurate OPUD ratepayers will be paying close to three times the cost of open market power.

The worst-case scenario assumes that total cost will be $59.9 million. This includes construction costs of $45 million, $14.4 million in preconstruction “sunk cost” spending, and assumes the highest possible aesthetic flow of 300 cfs. Under this scenario, the cost to produce power at Enloe Dam will be about $149 / MWH. If this alternative comes to pass, OPUD ratepayers will be paying nearly four times as much for Enloe energy than power purchased on the open market.

The issues that RME outlined in our 2011 and 2014 reports remain today. These include:

  • Inflation has driven up the cost of Enloe Dam construction.
  • The cost of acquiring power on the open market has not inflated.
  • There is still no determination regarding the amount of water that would be required for aesthetic flows, and it remains uncertain how much power Enloe would ultimately produce.
  • The total costs for the project are ballooning to as much as $59 million, which is about double the original cost estimate. The ratepayers will be responsible for paying these costs.

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