ML20112D646
| ML20112D646 | |
| Person / Time | |
|---|---|
| Site: | Shoreham File:Long Island Lighting Company icon.png |
| Issue date: | 08/01/1984 |
| From: | AFFILIATION NOT ASSIGNED |
| To: | |
| References | |
| OL-4-A-LP-005, OL-4-A-LP-5, NUDOCS 8501140415 | |
| Download: ML20112D646 (14) | |
Text
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BASIC PREMISES AND ASSUMPTIONS
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The following is a description of.the Premises and Assumptions which are common to all three of the folicwing cases unless otherwise noted:
Case I:
Shoreham I/S* 7/85; synchronized 12/84 Case II:
Shoreham I/S 7/85; synchronized 1/85 Case III:
Shoreham I/S 10/85; synchronized 3/85 1.
Study Period 1984 through the year 2000 2.
Load Forecast The following tabulates the energy and peak load demand forecast that was used in the analysis.
FORECAST Summer
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Peak Requirements *!:
Sales Year (MW)
(GWH)
(GWH) 1984 3210 14539 13315 1985 3270 14876 13566 1986 3315 15097 13753 1987 3360 15333 13954 1988 3360 15372 13990 198) 3390 15474 14083 1990 3445 15788 14370 1991 3505 16122 14675 1992 3585 16542 15059
- In service.
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- Sales plus losses and Company use.
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'fb) 4 Sunmer Peak Requirements Sales
. Year (MW)
(GWH)
(GWH) 1993 3670 17038 15512 1994 3760 17543 15974 1995 3855 18056 16443 1996
.3940 18556-16909 1997 4035 19084
,17382 1998 4125 19612 17865~
1999 4220 20143 18350 2000 4315 20678 18839 3.
Inflation Rates Year Value 1984 5.07.
1985 5.77.
1986 5.8%
1987 5.7%
~1988 - Balance of Study 6.07, 4.
Austerity Program
.Both the total corporate capital budget and the total' electric operation and maintenance (0 & M) budget reflect austerity measures for the calendar year 1984 Beginning with 1985,.both: budgets begin a transition towards a nor-mal level.
The transition is smooth rather than a step function.
Depending on the items being addressed, this transition could take up to two. ears.
Thus, by 1987, we should be back to a nornal level.
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5.
Construction Budget This budget is developed consistent with No. 4 above.
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Following is a description of the maj.or components:
Shoreham f
Book Cost 7/85 C.O. date - $4.07 billion 10/8,5 C.O. date - $4.22 billion These costs were established consistent with the Company's proposal in its current rate case filing re-
. garding the Financial Stability Adjustment (FSA) revenues.
Capital estimates for post-commercial,expendi-tures (including capital modifications and retrofits).
Shoreham - Post-Commercial Capital Co.::s, Year
$X Million 1985 22.8 for 7/85 I/S and
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11.4 for 10/85 I/S 1986 44.6 1987 48.2 1988 46.4 1989 21.7 1990 26.1 1991 27.1 1992 25.9 1993 31.1 1"4 32.9 1995 30.8 1996 37.0 1997 39.2 j
1998 36.7
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6 Year
$X Million
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1999 44.1 r
'2000 46.7 For the purposes of this presentation, a 30 year book life was assumed for Shoreham starting from the beginning of commercial operation.
Nine Mile Point #2 3
Fot' the year 1984, it was assumed that LILCO will continue to cover all interest expenses incurred by the trust but will make no further contributions towards direct construction expenditures.
Starting in 1985, LILCO will satisfy its obligations in full, including the amounts not covered in 1984.
For'the purpose of this analysis, a' January 1,1987 in-service date was assumed.
New 345 kV Interconnection It is assumed that LILCO builds and owns the next interconnection and associated internal transmis-sion reinforcements.
The in-service date is 1/1/91.
The capital requirements are as
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follows:
Year SX Million 1985 1
1986 2
1987 8
s 1988 45 i
1989 56 1990 62 Coal Conversion No coal conversions are assumed.
Futura Generation Additions J
Coal generating units will be added based upon need.
Need is defined as a reserve deficiency After the reallocation of NYPA hydropower.
New units will be added for a reserve deficiency of 200 MW or more..
S 4
The capital raquirements for future coal units,
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based on the UE&C Report (January 1983-Jamesport Study), for the date.s 1998 and 2000, are as follows:
Future _ Coal Units Capital Requirements (Excluding AFC)
(S Millions)
C.O. Date 1/98 1/2000 Size 400 MW 400 MW Unit Type Type 1 Type 2 Year 1985 1986 1987 1988 1
1989 1
1990 8
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1991 12 1
1992 30 1
1993 138 2
1994 281 25 1995 293 76 1996 336 88 1997 238 232 1998 391 1999 238 Other in-service dates were adjusted by inflation.
Transmission Requirements for Future Coal Units The following are the capital requirements for transmission system reinforcements to accommodate thee future coal units. r L
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Future Transmission Capital Requirements (Excluding AFC)
(S Mill' ions)
First Coal Unit 1/98 C.O.
Date Year 1987 1988 1989 1990 1991 2
1992 4
1993 23 1994 59 1995 77 1996 100 1997 52 Bokum, New Haven, Jamesport The following assumptions were incorporated for these projects:
New
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Haven Jamescort Bokum Date of Amortization 1/85 1/87 1/88 Period of Amortiration 10 yrs.
10 yrs.
10 yrs.
Method St. Line St. Line St. Line Full Recovery Return on + Return of Yes Yes Yes "Other Capital" This item represents the balance of the total capital budget for the electric and gas systems adjusted in accordance with the austerity program outlined in No. 4 above.
Common plant o
is allocated 837,to the electric system and 177, to the gas system.
Capital requirements for this item assumed in this study are as follows:
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'q Other Capital (SX Millions)
Year 1983 1984 1985 1986 1987 1988 1989 1990 Electric System 59 47 62 77 95 101 107 113 Gas System 18 15 15 15 16 17 18 19 Total 77 62 77 92 111 118 125 132 Af ter 1990, capital expenditures were escalated at 6K per year, using 1990 as the base.
Capital To Extend Service Life of Existing Plants The following capital expenditures were added to approximate the cost of improvements to extend the service lives of LILCO s existing fossil steam plants from 35 to 45 years (the assumed retirement dates for this study).
Extension of Service Life Capital Requirements
(@X Millions)
_1986 1988 1990 1992 1994 1996 1999
)
Total 5
5 5
17 28 32 26 6.
Total Electric 0 & M Budget (excluding fuel)
The starting point for the annual O & M expenses was LILCO's current rate case filing.
Budget figures for the years 1984-89, inclusive, were developed consis-tent with No. 4 (Austerity Program) above.
Future prcjections are based on the extrapolation of this data.
Electric System O&M Budget (Excluding Fuel & Nuclear)
($ X Million)
Year 1983 1984 1985 1986 1987 1988 1989 Total 205 163 190 230 260 275 295 From 1990 on, escalate at 6% per year using the 1989 figure as the base.
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.J Shoreham Operating Costs Shoreham 091 (4 X Million)
Year 1985 32.2 for 7/85 I/S and.
16.1 for 10/85 I/S 1986 68.0 1987 82.6 1988 85.6 1989 80.8 I
1990 96.2 1991 102.0 1992 96.2 1993 114.6 1994 121.5 1995 114.5 1'
1996 136.5 1997 144.7 1998 136.4 1999 162.5
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2000 172.2 Future Coal Units 091 expenses for future coal units were also added to the above.
The O&M assumed for a 400 MW, Type 1 coal unit installed in 1998 is
$68 million, and for a 400 MW, Type 2 coal unit installed in 2000 is $38 million (both in current year dollars).
7.
Gas System O&M Budget The following gas system O&M budget was developed in accordance with the austerity measures outlined above in No. 4:
Gas System O&M Budget (5 X Millions)
Year 1983 1984 1985 1986 1987 1988 1989 Total 57 48 50 55 60 64 67 From 1990 on, expenditures were escalated at 6f. per year using the 1989 figure as the base.
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8.
Property Taxes Existing System Thc property taxes assumed for the existing electric and gas systems are as follows:
Property Taxes - Existing System (Non-Nuclear)
(5 X Millions)
Year 1984 1985 1986 1987 1988 1989 Electric 129 139 150 162 175 189 Gas 23 25 27 29 31 34 Total 152 164 177 191 206 223 From 1990 on, property taxes were escalated at 67. per year using 1989 figure as the base.
Shoreham The Shoreham property taxes assumed are as follows:
Shoreham Property Taxes (1985 C.O.)
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(S X Million) 1985 1986 1987 1988 1989 1990 1991 1992 1993-2000 5 per 67 73 81 89 97 107 118 Escalate month at 6%
NOTE:
Property taxes prior to commercial operation are capitalized.
Other Property Taxes Additional property taxes assumed for the next interconnection and the future coal units are as follows:
Other Property Taxes (S X Million)
Interconnection 20 (1991$ - Escalate at 6%)
Future 400 MW Coal Units Type 1 - C.O.
1/98 57 (1998$ - Escalate at 6%)
Type 2 - C.O.
1/2000 48 (2000$ - Escalate at 6%)
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9.
Fuel Costs Oil 1
The basis for the fuel oil costs used in this study is the Fuels Purchasing official forecast for 1984-1988, dated 9/12/83 which was reconfirmed on April 3, 1984.
It is assumed that special limitations will not be renewed.
A premium is applied to the cost of low sulphur fuels in 1985 to reflect the loss of bargaining power as a result of the elimins-tion of special limitations.
Beyond 1988, fuel oil is assumed to escalate at 2% real.
FUEL OIL COSTS Cost Plant
%S Units 1984 1985 1986 1987 1988 Npt. 1-3 2.8
$/MBTU 4.36
$/ Bbl.
27.65 1.0
$/MBTU 5.31 5.42 5.52 5.77
$/ Bbl.
32.80 33.45 34.10 35.65
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Pt. Jeff 3-4 2.8
$/MBTU 4.42
$/ Bbl.
28.05 Pt. Jeff 1-4 1.0
$/MBTU 5.38 5.48 5.59 5.84
$/ Bbl.
33.20 33.85 34.50 36.05 Glenwood 4-5 0.37 $/MBTU 5.31 5.56 5.67 5.77 6.04 E.F.B. 1-2 1.5
$/ Bbl.
32.58 34.08 34.75 35.40 37.03 Npt. 4 0.7
$/MBTU 5.08 5.35 5.46 5.56 5.82
$/ Bbl.
31.38 33.03 33.70 34.35 35.93 F. Rockaway 4 0.3
$/NBTU 5.35 5.57 5.68 5.79 6.06
$/ Bbl.
32.78 34.18 34.85 35.50 37.13 Gas Turbines
- 2
$/MBTU 6.52 6.70 6.88 6.88 7.25
$/ Bbl.
37.80 39.06 39.90 39.90 42.00 Coal I
l Coal cost estimates used in this study are based tron forecasts provided by Fuels Purchasing in l
11/82 for delivery to Long Island updated for f~~
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current inflation estimates.
Beyond 1988, coal is assumed to escalate at 1% real.
Coal Costs Year 1984 1985 1986 1987 1988 1989-2000
$/MBTU 2.32 2.44 2.58 2.76 2.88 Escalate at 7%
Nuclear Fuel Nuclear fuel costs are based on the latest Company astimates.
These estimates, which were for a January 1, 1985 in-service date, were adjusted to reflect the assumed 1985 in-service date.
The nuclear fuel costs include principal, interest and spent fuel disposal costs.
The spent fuel disposal costs are based on a U.S. Department of Energy Contract that requires a fee of 1 mil /kwh of nuclear generation (gross) to be collected.
These estimates were developed for the years 1985-1988; thereafter the total cost was escalated on a $/MBTU basis at an escalation rate of 6% per year.
Nuclear Fuel Costs - Shoreham I/S 1985 Year 1985 1986 1987 1988 1989-2000
$/MBTU
.789
.857
.917
.961 Escalate at 6%
10.
Other Production Assumotions LILCO's in-house production costing model was used to determine total LILCO annual fuel costs for the study period.
Total annual production fuel costs are consistent with the assumptions stated herein.
In addition to those factors already noted above, the following are also taken into account in the determination of total fuel costs:
All LILCO-owned generating units cost NYPP economy transactions The addition of 100 MN of refuse-fired or other unconventional generation sources by 1990.
NYP# hydro reallocated to LILCO on a gradual schedule reaching 123 MW by 1995 in accordance with a schedule proposed by the Energy Association as follows: -
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NYPA Hydro Reallocated To LILCO Year 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995-2000 MW 34 34 39 44 49 87 90 98 106 114 123 Firm Capacity Purchase For those years when there is an installed reserve deficiency, it is assumed that firm capacity can be purchased to satisfy reserve requirements.
Firm capacity is priced at the cost of an intermediate load fossil steam unit built in the early 1970's such as those included under the exieting capacity exchange agreement with NUSCO.
Total Production Fuel Costs Table 4 provides the total annual production fuel cost for the two assumed Shoreham in-service dates.
Production Fuel Costs
($ X Million)
Shoreham C.O.
7/1/85 10/1/85 Year 1985 676 726 1986 583 583 1987 611 615 1988 633 636 1989 616 616 L990 732 734 1991 741 741 1992 739 739 1993 881 881 1994 988 988 1995 1108 1108 1996 1243 1243 1997 1399 1399 1998 1415 1415 1999 1588 1588 2000 1619 1619 11.
Retura, Interest and AFC Rates The following reflects the assumptions used in this study:
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6 Return on Interest Trust Equity (%)
Rate (%)
Interest Year Comm.
Pref.
LTD STD Rate (%)
1984 16.0 11.0 11.0 1985 16.0 13.5 13.5 1986 15.0 13.0 13.0 12.0 12.0 1987 14.0 12.0 12.0 11.0 11.0 1988-2000 14.0 12.0 12.0 11.0 11.0 NOTES:
A " " indicates that the program was precluded from issuing this type of security in the year indicated.
The AFC rate utilized in a given year is based on the prior year weighed average cost of capital.
12.
Other Assumptions The discount rate for purposes of present worthing is 13.0%.
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The amount of rate relief granted was assumed to be equal to the revenues required.
No regulatory lag was assumed.
That is, the SFP model was executed in the " bottom up" mode assuming conventional rate treat-ment.
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