Carlsbad Desalination Project –Responses to Previous Board MemberQuestions                         Special Board Meeting  ...
ADDITIONAL SENSITIVITY ANALYSIS OF UNIT COST TO INCREASE ELECTRICITY               PRICES                                 ...
Projected Electricity Price – Carlsbad Desal Project                                             Mid Scenario             ...
Impact on Water Unit Price - Comparison               Base Case vs. High (Levelized)                                Base C...
BOARD QUESTIONS ONUNIT PRICE/CAPITAL & OPERATING COST                                  5
QUESTIONS ON UNIT PRICE AND COSTWater Unit Price and Cost Information provided to theBoard on November 5, 2012• Detailed r...
Interest Rates and Assumptions•Debt Service charge is a direct pass through   –No Poseidon mark-up   –Interest rate benefi...
Interest Rates and Assumptions                               6.10% Bond Rate                     5.60% Bond Rate          ...
Escalation Rates and Assumptions             Unit Price Component    WPA Contractual Provision        Staff Modeling Assum...
UPWARD SLOPING VS. LEVELIZED CAPITAL CHARGE       Principal           $739 million    Principal           $739 million    ...
UPWARD SLOPING VS. LEVELIZED CAPITAL CHARGE                       $36 Million                       Difference            ...
WHAT ARE THE NON-ELECTRICITY O&M COSTS?Fixed Operator Compensation (2012$)                    $11,871,000    • Labor    • ...
BOARD QUESTIONS ON CONSEQUENCESOF DELAYING THE DECISION ON THE WPA                                  13
Potential Impact of Delay of WPA ApprovalLease Extension Requirement  NRG     • Site owner     • Lease and Easement Agreem...
Potential Impact of Delay of WPA ApprovalEPC Construction Contract Pricing andContractor concerns  Kiewit-Shea Desalinatio...
Potential Impact of Delay of WPA ApprovalO&M Contract Pricing and Contractor concerns  IDE     • Original bid submitted 20...
Potential Impact of Delay of WPA ApprovalFinancing concerns:  – Market Conditions     • Current market conditions are favo...
Upcoming SlideShare
Loading in...5
×

Carlsbad Desalination Project – Responses to Previous Board Member Questions, Nov. 8, 2012

2,202

Published on

Presentation given at the San Diego County Water Authority's Special Board of Directors' Meeting on Nov. 8, 2012. To view agenda visit www.sdcwa.org/meetings-and-documents

Published in: News & Politics
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
2,202
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Carlsbad Desalination Project – Responses to Previous Board Member Questions, Nov. 8, 2012

  1. 1. Carlsbad Desalination Project –Responses to Previous Board MemberQuestions Special Board Meeting November 8, 2012 1 1
  2. 2. ADDITIONAL SENSITIVITY ANALYSIS OF UNIT COST TO INCREASE ELECTRICITY PRICES 2
  3. 3. Projected Electricity Price – Carlsbad Desal Project Mid Scenario High Scenario 25 25 1.2% 1.2% 20 20 3.0% 3.4%cents/kWh cents/kWh 15 15 10 10 5 5 2.0% 2.4% - - 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 Non-Levelized Price Levelized Price Non-Levelized Price Levelized Price Future Electricity Price – Key Drivers Factors driving higher growth rate Factors driving lower growth rate • Renewable Portfolio Standard (RPS) • Natural Gas Prices • AB 32 • Demand-Side Response • Fleet replacement • Rate-Setting Process 3
  4. 4. Impact on Water Unit Price - Comparison Base Case vs. High (Levelized) Base Case vs. High (Non-Levelized) 5,500 5,500 Water Water 5,000 Unit Price 5,000 Unit Price increase: increase: 4,500 $127/AF 4,500 $127/AF 23% 23% 4,000 21% 4,000 21% Water $/AF$/AF 3,500 3,500 Unit Price increase: $182/AF 26% 3,000 3,000 22% 2,500 2,500 2,000 25% 2,000 25% 25% 1,500 25% 1,500 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 Mid Scenario (Levelized) High Scenario (Levelized) Mid Scenario (Levelized) High Scenario (Non-Levelized) 4
  5. 5. BOARD QUESTIONS ONUNIT PRICE/CAPITAL & OPERATING COST 5
  6. 6. QUESTIONS ON UNIT PRICE AND COSTWater Unit Price and Cost Information provided to theBoard on November 5, 2012• Detailed review of unit price cost components – Debt Service Charge – Equity Return Charge – Pipeline Installment Payments – Fixed and Variable Operating and Electricity Charges• Reference Information – Explanation of bond interest rate assumptions – Unit price calculations at 48,000 AFY and 56,000 AFY – Data and calculations that tie back to WPA appendices – Calculations that show conversion to 2012$• Capital Cost Detail for Project Components 6
  7. 7. Interest Rates and Assumptions•Debt Service charge is a direct pass through –No Poseidon mark-up –Interest rate benefit/risk assigned to Water Authority•Current Market Interest rates for low investment grade infrastructure –Plant Bonds: 5.1% (Private Activity Bonds subject to AMT)(PABs) –Pipeline Bonds: 4.6% (Municipal Purpose Bonds exempt from AMT)•Final interest rate will not be known until financial closing –Staff established 100 BP buffer from expected market rate –Water Unit Price analyzed at mid point 5.6% and maximum of 6.1% for the Plant Bond final maturity –Will seek Board Authorization to price Bonds at maximum of 6.1% for the Plant Bond final maturity 7
  8. 8. Interest Rates and Assumptions 6.10% Bond Rate 5.60% Bond Rate $21,042,8001 $18,955,9331First YearDebt Service Annual Water 56,000 48,000 48,000 AF/year 56,000 AF/year Deliveries AF/year AF/yearDebt Service Charge (2016$/AF) $658 $564 $592 $508Debt Service Charge (2012$/AF) $612 $525 $551 $4721 First year debt service and water deliveries pro-rated to reflect partial first contract year 8
  9. 9. Escalation Rates and Assumptions Unit Price Component WPA Contractual Provision Staff Modeling Assumption Fixed Charges: A fixed annual “slope” of1. Debt Service Charge 2.5% has been used to 2.5% Fixed Slope establish this charge A fixed annual “slope” of2. Equity Return Charge 2.5% has been used to 2.5% Fixed Slope establish this charge A fixed annual “slope” of3. Pipeline Installment Payments 2.5% has been used to 2.5% Fixed Slope establish this charge4. Fixed Operating Charge Indexed to San Diego CPI Assumed to escalate at 2.5%5. Fixed Electricity Charge Linked to SDG&E Rates Assumed to escalate at 2.0% Variable Charges:6. Variable Operating Charge Indexed to San Diego CPI Assumed to escalate at 2.5%7. Variable Electricity Charge Linked to SDG&E Rates Assumed to escalate at 2.0%8. Poseidon Management Fee Indexed to San Diego CPI Assumed to escalate at 2.5% 9
  10. 10. UPWARD SLOPING VS. LEVELIZED CAPITAL CHARGE Principal $739 million Principal $739 million Interest $937 million Interest $794 million Equity Return $764 million Equity Return $628 million Capital Payments $2,440 million Capital Payments $2,161 million 10
  11. 11. UPWARD SLOPING VS. LEVELIZED CAPITAL CHARGE $36 Million Difference 30 year NPV 11
  12. 12. WHAT ARE THE NON-ELECTRICITY O&M COSTS?Fixed Operator Compensation (2012$) $11,871,000 • Labor • Maintenance • Membrane and Filter replacement • Operator fees, insurance, bondingFixed Non-Operator Costs (2012$) $7,326,000 • Lease payments • Owner insurance • Mitigation/Monitoring • Property taxes • Administrative Costs • Debt feesVariable Operating Costs (2012$) $4,848,000 • Chemical dosing of raw water • Pre-treatment cleaning and disposal of solids • Operator fee (variable component) 12
  13. 13. BOARD QUESTIONS ON CONSEQUENCESOF DELAYING THE DECISION ON THE WPA 13
  14. 14. Potential Impact of Delay of WPA ApprovalLease Extension Requirement NRG • Site owner • Lease and Easement Agreement executed 2003 and amended 10 times, primarily to extend construction start deadlines. • NRG considering other redevelopment options • Further extensions would be required if WPA not approved in November 14
  15. 15. Potential Impact of Delay of WPA ApprovalEPC Construction Contract Pricing andContractor concerns Kiewit-Shea Desalination • Original bid submitted 2010 • Risk of losing key members of project management team to other projects • Pricing commitment expires 12/31 • Reluctant to commit additional resources without WPA 15
  16. 16. Potential Impact of Delay of WPA ApprovalO&M Contract Pricing and Contractor concerns IDE • Original bid submitted 2008 • Pricing commitment expires 12/31 • Reluctant to commit additional resources without WPA 16
  17. 17. Potential Impact of Delay of WPA ApprovalFinancing concerns: – Market Conditions • Current market conditions are favorable for issuance of “BBB” municipal bonds • Interest rates remain at historic lows • Credit spreads (between AAA and BBB) are tight • Market conditions can change abruptly, especially with regard to credit spreads – CPCFA • Private Activity Bond allocation by CPCFA is based on 2012 issuance • Risks and delays may be associated with need to seek 2013 allocation 17
  1. Gostou de algum slide específico?

    Recortar slides é uma maneira fácil de colecionar informações para acessar mais tarde.

×