2 Attachments 

The analysis presented in Table 4-10 (which includes a typo –Total water deliveries in 2011 are 1.55 M not $1.55 

M) assumes that the increase in the CAP pumping energy charge would persist over the term of the hypothetical 

CAWCD bonds used to pay for the federal share of the SCR installation. For our analysis, we assumed 20 year 

bonds (p 59). The bond payments would increase the pumping energy charge for CAWCD, which would pass on 

this increase cost to CAP water customers until the bonds were paid down. 

If you have any other questions, let me know.

Dave

David Peterson

National Renewable Energy Laboratory 

Deployment & Market Transformation

Integrated Applications

1617 Cole Blvd, MS-RSF401 

Golden, CO 80401

Phone: 303-275-3615 

RE: Questions for NREL from EPA Contractor 

Peterson, Dave 

to: 

Hurlbut, David, Colleen McKaughan, Haase, Scott 

04/18/2012 10:35 AM 

Cc: 

Anita Lee, Eugene Chen 

Hide Details 

From: "Peterson, Dave" <David.Peterson@nrel.gov> 

To: "Hurlbut, David" <David.Hurlbut@nrel.gov>, Colleen 

McKaughan/R9/USEPA/US@EPA, "Haase, Scott" <Scott.Haase@nrel.gov> 

Cc: Anita Lee/R9/USEPA/US@EPA, Eugene Chen/R9/USEPA/US@EPA 

History: This message has been replied to and forwarded. 

image001.png image002.png

Page 1 of 3

file://C:\Documents and Settings\ALEE07\Local Settings\Temp\notesBAAA25\~web7789.... 5/17/2012
From: Hurlbut, David 

Sent: Wednesday, April 18, 2012 10:27 AM 

To: Colleen McKaughan; Haase, Scott 

Cc: Anita Lee; Eugene Chen; Peterson, Dave 

Subject: Re: Questions for NREL from EPA Contractor

 

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 

installation). Table 1-12 includes estimates based on a 10-year recovery. 

 LNB/SOFA were treated as existing plant in service. These costs are already in rate base, so all of our estimates 

of cost 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 they refer to as a "risk premium" on top of their WACC. They would not provide a simple WACC, 

nor could we find one. For CAWCD, we used an approximation based on the current rate paid on municipal

revenue bonds in Arizona.

I'll ask Dave Peterson to weigh in on the fourth question. But honestly, both Reclamation and CAWCD were somewhat 

stumped about how 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 appropriation: issuing revenue bonds. So those estimates 

would be stable within 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 pumping 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

From: Colleen McKaughan <McKaughan.Colleen@epamail.epa.gov> 

Date: Tue, 17 Apr 2012 18:06:40 -0600 

To: "Haase, Scott" <Scott.Haase@nrel.gov>, David Hurlbut <david.hurlbut@nrel.gov> 

Cc: Anita Lee <Lee.Anita@epamail.epa.gov>, Eugene Chen <Chen.Eugene@epamail.epa.gov> 

Subject: Questions for NREL from EPA Contractor

Hi, Scott and David,

Page 2 of 3

file://C:\Documents and Settings\ALEE07\Local Settings\Temp\notesBAAA25\~web7789.... 5/17/2012
Our contractor has four questions that he was hoping that NREL could answer. Would you be willing to respondto 

the questions below? We are fine with getting a response via email, or getting on the phone with you if you feel 

that that would be the better approach. I have copied Anita Lee and Eugene Chen on this email. I will be out of 

the office from 4/20 - 4/30, so if you could reply to all of us that will keep things moving 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 + 

Baghouse capital expense applied with respect to timing (e.g years of installation/years of cost realization & cost recovery)?

3. In NREL’s development of baseline plant costs, how were the recent LNB/SOFA investments incorporated into 

existing 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 represent a weighted average cost of capital, WACC, (costs of debt & equity)? 

(b). What rates did NREL assume for each owner’s specific 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?

Page 3 of 3

file://C:\Documents and Settings\ALEE07\Local Settings\Temp\notesBAAA25\~web7789.... 5/17/2012