### Re: Questions for NREL from EPA Contractor Questions for NREL from EPA Contractor Hurlbut Hurlbut,
, David to: Colleen McKaughan, Haase, Scott 04/18/2012 09:27 AM Cc: Anita Lee, Eugene Chen, "Peterson, Dave" History: This message has been forwarded. 2 attachments

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Nice to hear from you, Colleen.

* The SCR and SCR+ scenarios generally assume a flat 20 year period for amortizing initial fixed costs (capital plus instal lation). Table 1-12 includes estimates based on a 10-year recovery. * LNB/SOFA were treated as existing plant in ser vice. These costs are already in rate base, so all of our estimates of co st impacts treat LNB/SOFA as part of the current baseline, not as a potential change case. * The discount rates we used are shown in table 1-10. All are WACC provided by the utility, except for SRP which added what the y refer to as a "risk premium" on top of their WACC. They would not provi de a simple WACC, nor could we find one. For CAWCD, we used an approximation ba sed on the current rate paid on municipal revenue bonds in Arizona.
I'll ask Dave Peterson to weigh in on the fourth qu estion. But honestly, both Reclamation and CAWCD were somewhat stumped about h ow they'd pay for the US share of costs. Lacking better guidance from them, we assumed the simplest reasonable approach that didn't depend on federal a ppropriation: issuing revenue bonds. So those estimates would be stable w ithin the range shown in table 4-10, apart from any cost unrelated to BART. I can't say offhand whether revenues from excess power sales would affect the p umping charge; Dave Peterson might be able to shed some light on that.
I hope this helps.

________________________________ David Hurlbut, Ph.D. Economist Strategic Energy Analysis Center National Renewable Energy Laboratory 303-384-7334 [cid:65529772-4250-45B5-AE30-6898176795CD]

________________________________

From: Colleen McKaughan <McKaughan.Colleen@epamail. epa.gov< mailto:McKaughan.Colleen@epamail.epa.gov>> Date: Tue, 17 Apr 2012 18:06:40 -0600 To: "Haase, Scott" <Scott.Haase@nrel.gov<mailto:Sco tt.Haase@nrel.gov>>, David Hurlbut <david.hurlbut@nrel.gov<mailto:david.hurlbu t@nrel.gov>> Cc: Anita Lee <Lee.Anita@epamail.epa.gov<mailto:Lee .Anita@epamail.epa.gov>>, Eugene Chen <Chen.Eugene@epamail.epa.gov<mailto:Che n.Eugene@epamail.epa.gov>> Subject: Questions for NREL from EPA ContractorHi , Scott and David ,

Our contractor has four questions that he was hopin g that NREL could answer. Would you be willing to respondto the questions bel ow? We are fine with getting a response via email, or getting on the pho ne with you if you feel that that would be the better approach. I have cop ied Anita Lee and Eugene Chen on this email. I will be out of the office fro m 4/20 - 4/30, so if you could reply to all of us that will keep things movi ng even while I'm out. Thank you in advance for your assistance.
Colleen W. McKaughan Associate Director, Air Division USEPA, Region 9 (520) 498-0118

1. In NREL’s approach to estimating cost impacts of the SCR or SCR/baghouseinvestments, how were SCR and SCR + Bag house capital expense applied with respect to timing (e.g years of instal lation/years of cost realization & cost recovery)?
3. In NREL’s development of baseline pla nt costs, how were the recent LNB/SOFA investments incorporated into exist ing plant cost?
7. NREL’s report indicates the use of a discount factor reflective of the various NGS utilities’ cost of capital. Two questions: (a). Did the discount factor for each owner represe nt a weighted average cost of capital, WACC, (costs of debt & equity)? (b). What rates did NREL assume for each owner’s sp ecific WACC calculation?
12. Does NREL anticipate that the increase in the CAP pumping energy charge in Table4-10 would persist over time at the Table 4-10 level?
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