ML20040D573

Alternative Evaluations WNP-4/5.

ML20040D573
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Site:	Washington Public Power Supply System, Satsop
Issue date:	03/26/1981
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1 ALTERNATIVE EVALUATIONS WNP-4/5 i

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ALTERNATIVE EVALUATIONS I

WNP-4/5 ABSTRACT This report contains an analysjs of potential cash flow reductions that could be achieved at WNP-4/5 by a managed work force reduction over the next 16 months. These cost deferrals would reduce the required level of financing now planned in that period for these projects, but the deferrals would also result in fuel load delays and associated project cost increases as well as additional costs for replacement power. The relative significance of these and other pertinent factors are dis-cussed in this report.

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I-l L  !. INTRODUCTION hie purpose of this evaluai; tort is to examine injuf_f_icient_ detail _the options available to Supply System management to select.tvely_teduce the project turn, would work at WNP-4/5 reduce to achieve the near-term of_ cost A (er_tals_whic forecastea_ran.ge_d funding G

_r_ equi ementtu t

reduction in project activity would. have_an_. impact _on_the planned _ fuel.

, load and comercial operational dates and the possible cost increases which could occur must be well understood as a part of the decision process. Later operational dates could also cause impacts to the Proj-

. ect Participants and others in the region with respect to loss of power production and the net increases in costs which might be incurred in purchase of replacement power.

The evaluations which have been made and sumarized in this report de-scribe two periods of planned slowdown at each project -- a six-month and a twelve-month period beginning April 1981. A range of activity levels all the way down to essential shutdown of construction was exam-ined for each situation (in all cases the engineering effort was main-tained at or near current planned levels). Construction activities were examined on a contract-by-contract basis to determine the effect of various manning levels in achieving cost deferrals on each con-tract. The composite was then examined to determine net cash deferrals and related impacts on fuel load dates. All other significant perti-nent cost elements were also examined such that the final result is an ability to track cost deferrals with fuel load delays. These fuel load delays result in increased project costs because of increased escala-tion and increased interest to fund the additional escalation and in extension of fixed costs including extended staffing. All three f actors -- cost deferral, fuel load delay, and project cost increase --

are then correlated. Finally, the net cost increase due to purchasing replacement power is obtained to complete the analysis.

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SUMMARY

OF RESULTS

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The results of this evaluation are sumarized in Chart III-1, Chart III-2 and Table III-1. . The charts are a cross-plot of data developed in the evaluation and indicate the cash flow reductions, the fuel load delays, and the project cost increases of either six- or twelve-month slowing down programs for each project. The weeks of fuel load delay on the abscissa are plotted against the cash flow deferral (on the left ordinate) and against the project cost increase (on the right ordi-nate). As an example, for a six-month program as shown in Chart III-1, given a cash flow reduction goal of $100 million for WNP-4, it can be seen that this would cause a fuel load delay of about 34 weeks. It can clso be seen that a delay of 34 weeks would result in a project cost nerease of about $260 million. The project cost increase is primarily due to the added escalation and associated added interest costs caused by the extended construction period. In a like manner, data for a twelve-month program is displayed on Chart III-2. The information for each project is independent of the other and it would also be possible i to select a six-month program at one project and a twelve-month program at the other.

Therefore, assuming the goal is a deferral of a specified quantity of money, various combinations of events at one or both projects for the same or different periods of slowdown can be selected. The resultant fuel load delay at each project and the associated project cost in-crease can then be determined.

The data can also be used in the other direction; i.e., for an inten-tional selected fuel load delay based on a reduction in construction

effort, the approximate associated cash flow deferral and project cost l increase can be determined.

l It is interesting to note that while the project cost increases for a given fuel load delay are essentially the same for both projects, there

[ is a marked difference in the amount of cash flow deferrals which are achieved for the same fuel load delay at each project.

For example, on Chart III-2, for a twelve-month slowdown program which results in a fuel load delay of 30 weeks, the cash flow deferral at ELP-4 is slichtly nw q cn e<1 W _(33% of the planned cash flow) whereas at WNP-5 the deferral is oniv abnitt t7n million (17% of the planned cash"r iow). This difference is due to two primary reasons.

First, the planned cash flow at WNP-4 is heavily dominated by construc-l tion cost (52% at WNP-4 compared to 38% at WNP-5) while prepurchase contracts are a more significant factor at WNP-5 (23% versus 7% at

- WNP-4) . Only modest reductions (10%) in prepurchase contracts are believed possible in these slowdown scenarios, therefore, WNP-5 has less to offer in deferrals. Further, although actual construction f

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! ac ivity on WNP-5 was assumed to be reduced to a minimum in the extreme i cases, the actual construction costs do not decrease proportionately at s WNP-5 for these reasons: (1) a higher level of joint activity is g ' planned; i.e., the WNP-3/5 haul road with half the costs flowing to -

WNP-5, and (2) a number of contracts are in mobilizaten and, again, these are jointly costed to both WNP-3 and WNP-5 and are not affected by a reduction in specific activity on WNP-5.

Another observation which can be made in reviewing these charts is that a given dollar deferral will have less impact on project schedules if the deferral is accomplished in the longer period program. For ex-ample, in a six-month program as shown in Chart III-1, a $100 million deferral at WNP-4 would impact the fuel load date by 34 weeks, whereas, a $100 million deferral over twelve months (Chart'III-2) would impact the schedule by only 14 weeks. This heavier impact comes from two rea-

, sons: (1) in a six-month slowdown there is a seasonal effect on some

~: work caused by pushing it into a winter period, but more significantly, (2) in extreme cases of work reduction, the remobilization delay is a heavier proportion of the total delay in a six-month program than it would be in a twelve-month program.

The data from these charts can be used to compile various possible com-binations of plans as shown in Table III-1. The only information not taken directly from the charts is the Cost of Replacement Power. This l

infomation was developed by a separate analysis performed in part by l R. W. Beck and Associates. In summary, it was assumed that a combina-tion of secondary energy in the region together with firm power pur-A z+ %e available chased to replace from theoutside theby power lost region fuel loadwould be[the m2-ys in WNPh and h The enm_

p_osite value derived from this analysis ([s $6 million per week Ver each proj ect. This is a minimum value in tn ange of possible ext al purchases considered. From this cost, a ' - MJM - per week l ' for each project would be avoided by not operating the projects and this is associated with fuel depletion and Operating and Maintenance costs. The resultant net cost of replacement power is at least $2 million per week for each project.

The example combinations on Table III-l indicate the total deferrals in cash flow which could be accomplished by the identified action on each I proj ect. The associated fuel load delay, project cost increase, cost i of replacement power and total cost increases are shown for each combi-  !

nation. There is no particular significance to the specific cases shown -- they are only examples to demonstrate the way in which the l data can be used and to give an overall impression of the total cost l

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, impacts associated with different levels of cost deferrals.

It should be noted here that cash flow reductions refer to actual ex-penses which could be deferred. The actual financing deferred is larger I

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what amounts to an additional two years of interest for each bond

. sale. At interest rates of 12 percent, this is equivalent to approxi- 8 mately 30 percent of the proceeds set aside from each sale. When fi-nancing costs are included, the net result is a need to sell at least

$1.5 in bonds for every $1 available for actual construction expenses (including actual interest paid). Therefore, a $200 million cash flow reduction represents a deferral of a minimum of $300 million of borrow-ings.

The data developed can be used to evaluate intentional cash flow reduc-tions in the expectation of possible lower interest rates for bond sales at a later date. For example, in a case where interest rates rose as high as 15 percent and deferral was contemplated in hopes of large changes in interest rates -- say, down to 10 percent -- the fol-i lowing analysis could be made and compared to the data developed in s Table III-1. For each $10') million sold at 15 percent, the levelized

' payback over 30 years is $15.230 million/ year. At 10 percent, this payback would be $10.608 million/ year. The difference is $4.622 mil-lion per year for 30 years. The present value of that stream of sav-ings depends upon the overall weighted average of borrowing on the project -- currently for WNP-4/5 this is 8.04 percent. Assuming it i

were 8 percent, the present value of $4.622 million per year for 30 years would be $52.0 million. (If the weighted average rose to 10 l ,

percent, the present value would be $43.6 million). Using the higher figure of $52.0 million for each $100 million of borrowing, an example case can be considered. For a $300 million deferral shown in Table III-1, it would be possible to defer $450 million in borrowing. If 4 this deferred borrowing could be placed later at a 5 percent interest rate savings, the present worth of that amount (at the time the proj-ects are ready for operation) would be $234 million. This possible savings must be compared to the increased cost of $932 million due to the combination of project cost increases and replacement prwr costs in the same time frame.

Finally, a specific evaluation was made for a total twelve-month con-struction shutdown at both projects where only engineering and protec-l tion of work in place continues. This is summarized in Table III-1 and would result in fuel load delays of 71 and 62 weeks at WNP-4 and WNP-5, respectively. The increased project costs would be $1,028 million and the cost of lost power would be $266 million for both projects. Costs deferred would be $394 million. Using the same assumptions as above, the combined deferral of $394 million in expenses ($590 million in bor-rowing) would result in a potential interest savings of $307 million.

l This must be compared to $1,294 million in increases costs -- the ratio here of potential costs to potential savings is approximately 4 to 1.

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' III-6 TABLE III-1 POSSIBLE COMBINATIONS Fuel Increased Cost Total Load Project Replacement Cost Deferral Delay Cost Power

• Increase

$100M Deferral 5 75M #4 21 wks 5 160M 5 42M 5 202M

, 6-Month Program 25 f5 15 wks 105 30 135 j Totals . . . . . . . 3T6DE 5 265M 3 75 5 337M

$. $150M Deferral $110M #4 39 wks $ 300M $ 78M $ 378M l 6-Month Program 40 #5 30 wks 200 60 280 3 Totals . . . . . . . 3HDR 5 520M 3178N 658M l $ 278M i

$200M Deferral $150M #4 29 wks $ 220M $ 58M 12-Month Program 50 f5 16 wks 125 32 157 Totals . . . . . . $200M 5 345M 3 9DR 5 435M

$300M Deferral $200M f4 44 wks $ 340M $ 88M $ 428M

-' 1 12-Month Program 100 #5 52 wks 400 104 504 I Totals . . . . . . 3T6DM 5 740M II9E 5 932M

$400M Deferral $290M #4 72 wks $ 560M $144M $ 704M l, 12-Month Program 110 #5 62 wks 485 124 609 Totals . . . . . . IMDR 51,045M THER 51,313M

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I 12-Month Construction $285M #4 71 wks $ 552M $142M $ 694M Shutdown - Both Projects 109 f5 62 wks 476 124 600 Totals . . . . . . 33TR 51,028M 3HER 51,294M l

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-$4M/wk each plant fuel & O&M savings (overstated) ,

$5/wk net cost of lost power - each plant (understated) l i

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AN INFORMATION SERVICE OF THE WASHINGTON PUBLIC POWER SUPPLY SYSTEM

? Q=. .'. ' .>. f .ad5*$$$$ $:).

) j 73 0 f June i  ; 12,1981 {

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Vol.1 No. 5

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. >. L :..i S'[iS%i:.M Ferguson recommends WNP-4/5 slowdown

' the need for power from these energy can be saved through Saying the decision was " pure hell" to make, Managing Director , projects. conservation.

In the next year alone, the Supply A recent energy forecast by the Robert ferguson has asked the Sup.

System would have to raise more Pacific Northwest Utilities Confer.

ply System board of directors to slow ence Committee projects a decline down construction of units 4 and 5 than 53 billion to continue work on all five plants, far more than the in power demand in the region.

for ony year. Finally, the Washington Legislature Supply System has ever had to Thefrecommendation came after mandated that an independent study Ferguson drew the bottom line on a borrow before.

I "The numbers as they appear are of the feasibility and need for WNP.

propo' sed fiscal 1982 construction just too large to handle without the 4/5 be undertaken. .

budget of $23.9 billion for all five "We have to put that question nuclear power plants. total commitment and support of the (need for power) to bed." Ferguson Ferguson's surprise announcement . state and region," Ferguson said.

He identified several recent events told a press conference in Richland, May 29 set in motion a series of that have created an atmosphere of WA. last week.

high. level meetings throughout the At the same press conference, region as board members and parti- " uncertainty" both with the public and on Wall Street. ferguson indicated he pinned his cipants discussed and debated the main hopes on gaining the needed recommendation. They include a recent Bonneville Power Administration study indicat. regional consensus from the legisla.

Supply System Board President ing a potentially large amount of tive study and from the new Stanton Cain said the Ferguson recommendation was just that and Regional Power Council.

"An endorsement of the council that the final decisions rest with the plus the study would go a long way 88 Participants that are owners of the ,

two projects and with the board of InSide towards relieving the uncertainty that surrounds the 4/5 issue," he e directors.

said.

On !une 10 the Supply System was G FUIl(ext of By law, the new regional council schecNied to submit its detailed Ferguson,s must come up with an ene,gy pian analysu of the budget to the board's for the Pacific Northwest in two Commmittee on Treasury. Finance, speech, Page 3 years, but Ferguson expressed hope and Audits. that the council would deal with the On the following day the commit-

' tee was scheduled to make its report G fnterview with 4/5 issue sooner.

Speaking before a subcommittee to either the Executive Committee or 4/5 study of the U.S. House of Represer tatives the full board. last week, BPA Administrator Peter The earliest that the board of head, Page 4 Johnson urged that this study be directors could act on the slowdown completed in one year,"in view of would be at a special meeting of the the risk to the region's power supply board June 16. Cain said. G [Ulf speed in making his recommendation.

'"d 'h * * * * *$5 ci'"d ahead on WNP-2* with the prospective moratorium."

Ferguson repeated his behef that johnson pointed out that SPA has WNP-4 and WNP-5 will be needed Page 2 a legal obligation under the regional to provide,the electric power power act to meet the region's needed to ensure the economic electic power requirements.

well-being of the Pacific Northwest. e Reactor parts Meanwhile, Ferguson stated he is But he said it would be entremely 6 ,

difficult to raise the money needed arr Ve al committed to continuing construe.

Safsop, Page 7 tion of proiects 1,2. and 3 as quickly to complete all five prc,ms while and as economically as possible.

. people in the region are questioning 6

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Complete text of Ferguson's speech to board  ;

Mr. President Ladies and (as well as experienced) inflation and you the 1961 budget as it now Centlemen: interest costs, we have developed , appears as a result of this extensive I appreciate your attending this the budget. review process.

special meeting of the board Comparisons were also made of in addition we have also increased because I have a most senous sub- construction production rates of our estimates using realistic numbers ject to discuss with you that has installing these materials with other for inflation and consequent wage developed just during the past two nuclear installations both in the and materials cost escalation to show week s. United States and abroac4 you our current FY-82 budget.

The subject is the FY-82 Budget. These numbers have never been These are the cold, hard realities As you know.. .this is the first developed this accurately before. we face, budget I have developed for the The plant designs have not in presenting this large initial cost Supply System, and it has been a changed since I became managing estimate this morning,I am at the very dif ficult process. For that rea. direcor.1 am just stating they were same time presenting a caution.1 am son. I am departmg from the budget not analyzed as thoroughly before. reminded of a discussion that I had presentation which you have pre. As an example,let me review with with Bill Anders, former AEC com.

viously esperienced. missioner, and one of the first

, Namely,I am discussing the matter astronauts to fly to the moon. I had with you before presenting a formal ~1982 Budget at the time jo,t been assigned the budget which would only give you (Proposed) responsibility for cornpreting the the choice to agree or disagree, then troubled Fast Flux Test Facility I am involving the bo.rd in the %g at Hanford.

integration of budgetary policy mat. Bill csked me to be sure to give ters with budget formulation.

The reason for this departure fro n past practices is that the budget as it

[" Bottoms-up g "$2.5""""""""1 Adjustment g

him a warning light if I saw signs of trouble.

This morning I am giving you a is developing for all five of our warning light.

nuclear power plants is very large. g _Quite frankly, fundi.nglh.e.[iye, Just last Thursday, through the External Impacts -pr jects at this $23.8.bflion,esti, development process. I drew the I rnated cost,, level presents,_a v.ery,,

bottom line on the total estimated [ very difficult problem _in todgs FY 82 budget for the first time, Frankly, though I strongly supoort g 3 financial market.

Unidentified Costs - We not only have high interest, the need for bringmg all five rJants rates, we have also seen a steady, on line at the earliest date and that ' movement of money from the long-the Pacific Northwest has the need g term bond market to the shorter-for the power from all five plants.

P term market.,This is,a,per,iod o{

the numbers as they appear are just

' C uncertainty not only for our funding, Too'farge to handle without total i biit'for funding of sithilarIInds of

• commitment and support of the I iro'g jects tl5roughout the United ifate and the region. IStates.

, 'Why has the budget risen so dramaticallyf

_ Completing all five projects at this, 9

budget level will require that we Because the budget I will present

to you is one not based on wishes. 1A roved Budget '".ething in excess of $3 ' '

,.bi!! ion this next year, and quite'.

hopes or probabilities. This budget Trankly, this challenges us with one has been arrived at by gomg back 'of the most difficult funding pro .

through each of the protects and ' grams in the United States.

determming at obsectively as possi. -

[ Moreover, we are'a'sked to carry ble what the rey lities are.  ; out this funding program during a By facing the reahties of plant period of uncertainty in this state designs and the quantities of con. and region.

crete, pipe 'and cable required to , As you are all aware, we suffer, complete them, the time and labor whether rightly or wrongly, a lack of required to mstall these matenais. 5 in Billions ,p.ublic confidence.

and realistic estimates of expected '

(Continued on pages 4 and 5) 3 1

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Ferguso'n speech to board. . e (Contmued from page JJ The PNUCC has published a dra8t just recently the legislature man- and consulting the best experts in report which gives the impression dated an independent study of the the field of load forecastin5 and that the electric load forecast for the resource planning, units 4 and 5 will feasibility and cost effectiveness of region has dropped off the equival- in fact be needed to provide electric conemuing projects 4 and 5 which, as ent of the output of our projects 4 you have just seen, are estimated to power to ensure the Northwest's and 5. economic well-being. .

cost some 512 billion. In addition, the Regional Pfanning As I have stated many times whether or not the state should Council has just begun its data undertake this study is not the issue. before, forecasting electric demand gathering which will result, some The fact that it,has contributed to two years from now,in a regional is not the However, thetask of thethat uncertainty Supply has System the uncertainty in the bond market. power plan. .

Because until the study is completed, been created as to the need for All of these activities are befor, power impacts the Supply System about March of next year, the the public right'no@ hale, dramatically in our daily operations, financial community will not really created a perceived uncertainty, not our credibility in the state, and in know that the people of this region only for the need for the power, recognize the need for and are our ability to raise necessary from 4 and 5, but with these kinds of funding. -

committed to building these projects. costs (which I believe are still the

• Another reality: The Bonneville in a recent town meeting at lowest cost energy available) Satsop,1 was repeatedly asked ques-Power Administration has recently whether or not the people of this published a study which indicates tions about the ability of the Supply region should be committed to pay. System to produce on its commit.

that potentially a great deal of ing $12 billion for units 4 and 5.,

energy can be saved by conser- ment. There were sincere questions Now from everything i know and about the need for power.

vation.

believe and after analyzing the data These questions from the public

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-'- e 4/5 issue puts universr sw W r iI * '

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.c The office of Applied Energy Studies occupies a small I 7 ,

! g -p cluster of rooms in one corner of a classroom building on

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.y Under its auspices, professors and students have quietly

' * , """ undertaken a number of regional energy studies in recent 4 years, including preparing the data base for the 1980 5 tate

. a 7 of Washington Energy Profile.

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[6 ./ g %.s. , ' of continuing to build Washington Public Power Supply System Projects 4 and 5.

. A g The Washington State Legislature last session mandated 9 erg,..f"k"%,8ta . ,

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that this study be undertaken by the Washington Energy Research Center through its aHiliate at W5U the Office of DI' .

~J i,Q , .' 2 Applied Energy Studies.

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) Professor George Hinman, a physics teacher, heads the

] Office and will serve as program manager for the 4/5 study.

l  ?,. w t f.i Q *W [i s 1 Craduate students and faculty members, however, will f,

@2 A h h  ! .J. h not be doing this study. The law mandates that " nationally l '

'? ' :e y".M-dk recognized" energy experts be employed.

Hinman said he expects the program proposal will be

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"* ready for bid by early June and that the study could be well J EJgM " . .!

underway by mid-July. It rnust be completed by March,

[ . George Hinman 19a2.

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are honest and real. and I believe for what I consider to be one of the associated with this recommenda.

that they need an answer. most important factors that has not tion. There is a real risk that by not Se totfay I am makmg a very yet been resolved, namely the kind proceeding there will be a shortfall difficult recommendation. But in of consensus and commitment that I of power in this region in the future.

making this recommendation, which believe is necessary to all of us to There will also be a layoff in con.

will invoke personal hardships, there successfully complete projects 4 and struction wcrkers that willimpact will be some very positive end 5.

, the people in this state immediately.

results. Therefore my recommendations Secondly,I recommend that the

• The first and most positive result are as follows: board take this opportunity and use of implementmg my recommenda. First, continue to construct, as this interim one-year period to con.

tion will be an unequivical commit. expeditiously as possible, projects sult with involved parties (partici.

ment to build projects 1,2, and 3 1 2 3. pants, investor owned utilities, direct with a realistic cost and schedule ,And that the board grant me service industries, SPA and the estimate which also has the real authority to implement an imm,e. regional Council) regarding the potential for improvement. diate construction moratorium on, region's need for power.

Also, there will be the opportunity ,WNP,4/5 for one year, while submit. I would hope that some resolution to reduce the publec's fear of com. ting a budget for FY.82 consistent could be brought to this important mitting to an obligation of some 524 with this action, need for power issue within six billion. This particular action will allow us r,onths, and no longer than one What I recommend will also dem. to fund projects 12 3 with fewer year.

onstrate the contribution of projects difficulties and with full concentra. And third,I request the authority 4 and 5 to this state in terms of jobs, tion of effort thereby gaining the to negotiate equitable cost sharing in terms of realinvestment for the very real possibility of improving on with affected parties as it relates to future, and in terms the public can the completion dates of these three the moratorium.

understand. plants. (Continued on page 6)

It will also provide an opportunity I am painfully aware of the risks

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energy office in the limelight lt is espected to be primarily an economic study, to recommend "whatever seems appropriate " Hinman answering the basic questions of need. costs and schedules, said.

Hinman said. Hinman has been a faculty member at W5U since 1%9 Managmg Director Robert Ferguson's recent recommen. and has also served as director of the university radiation dation to impose a one-year moratorium on building of center and environmental research center, units 4 and 5 shouldn't alter the scope of the study Prior to coming to WSU, he spent six years working for significantly, he said.

General Atomics Corp. of San Diego, a private company di ne no reason not to go ahead as planned," Hinman that supplies reactor parts for the nuclear industry.

said.

"I'm not anti nuclear; I've always felt that the technology The program proposal is broken down into five parts: is reasonable," Hinman said.

needs and alternatives. fmance cost and schedules, impacts He added, however, that he believed the nation could of temporary power surpluses, deheits and rate changes. get along without nuclear power if it has to.

and power imports and exports.

The main issue is cost. "I see no reason not to use it The contractor chosen to do the cost. schedule module, unless it becomes too expensive." he said, for example. willlikely mierview Supply System officials.

Hinman and the subcontractors hired to do the study will the admmistrative auditor, Senate Inquiry investigators and be working with a special nine. member steering others to come up with an mdependent est. mate. committee.

Similarly, the finance module consultant would go to the Dr. Peter Shen, the Supply System Technical Director will financial communsty to imd out how interest rates and represent the Supply System on the Committee, and Ray market conditions affect the Supolv System's ability to Foleen will represent the Participant's Committee. The contmue funding the two plants. other members have not yet been selected At the conclusion of the study, the office must come up with a recommendation. The legislature left it to the office Story and photo by Todd Crowell l

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' 4 3 3;* ,

ggg POWER LINES Ferguson speech to board. . .

(Continued from page 5) do. And now, as each of you l cannot make the recommenda.

I ,1f,we could reach a public under. individually has felt the frustration of tion for a moratorium without, at th

' standing on this issue within six this moment, I know you will under. same time, saying that with your months, there is a very real possibil. stand the saddening shock which support and the state and regional gi that we can hold the schedule , now overwhelms me as I draw the support on the need for power that

and cost estimates that we have seen bottom line on this cost estimate. we can successfully bring all five today. I cannot tell you at this time Reluctantly, I reached the conclu. plants on line within schedule and what the net cost for slowing con. sions and recommendations I have budget.

struction on 4 and 5 will be. But I just outlined. For even now we are I cannot be less than honest with mast urge this body to resolve the achieving new production records you, and I rnust be honest with issue of the need for projects 4 and on the very projects that I propose myself about this very real problem.

5 at the earliest possible date ther. we bring to a temporary halt. I took this job to succeed...and eby making the impact on our Our new productivity records we can succeed.

public as small as possible. reflect the stability we have been Our success is not to be drawn Allow me to close by saying this able to bring to labor, to contract. from others, ra;her, it will be built presenicion, and these recommen. inn, to engineering and tc financing. on the foundation of today's reality dations, have been pure hell for me. The restructured management and by constructing real-world generat.

For the past 10 months. I have contracting at the Supply System is ing capacity from hard, cold, facts spent eve y waking hour dedicating yielding new benefits. And these and data.

myself to completing these projects have been coupled with the strong in this alone we will build for she at the earliest possible date and at support we received from the legis. future.

~

the lowest possible cost. I assure you lature. Let me s~ these revelations I would hope that you concur in that the management staff feels as I come very hart & my recommendations.

Facts about Projects 4/5 -

Key dates Washington Public Power percent of the capability held Supply System units 4 and 5 are by utilities in Washington state.

being built in the state of WNP.4 is located at Hanford e June 16. Tentake date for special Washmgton to meet power in Eastern Washington and is meeting of the Supply System needs forecast for the Pacific designed to have a generating I**'d 'I U3'8"

, Northwest by the end of this capacity of 120 megawatts. It

! decade. is 22 percent complete.

The two projects are jointly e June 11-16, Negotiations begin fu l Construction management financed and backed by agree. bond haue to finance construction responsibility for the project ment with 88 publicly-owned of WNF.4/5.

was awarded to 8echtel Power utilities and the Portland based Corp. in Oct.,1980 replacing private utility, Pacific Power United Engineers and Con.

• Juh 24. Supph SystmW of and Light, known as struction which continues to Directors approves 1982 conserve.

i Participants. support engineering and some tion budge l Each participant is responsl. construction services. Approxi.

ble for making payments to the mately 3.300 people are Supply System for its share of ,y , , ,

employed on the project.

the plant costs as revenue WNP.5 is located in Grays WNP-4/5 scheduled for completion bonds come due. Bonds sold Harbor County, Wash., about ,,

• so far for the two projects 66 miles southwest

• Sattle. _

curramtly total 12.25 billion. Construction is 13 $ cent

( Participation in the two pro- complete. Approximately 1,420 jects encompasses a seven-state people are employed on the

• I area, with approumately 70 project.

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