HDWC economic evaluations -- a summary

Abstract

"John and I have put together a brief memo which looks at the problem of trying to set a rate for purchase of the geothermal energy. We've taken one situation (three cables, ten year development and high equipment availability) and analyzed the annual rates that HECO could afford to pay for the geothermal energy under different oil price forecasts. These are breakeven prices that utilize all of the net savings. The interpretation is given in tenus of the ratio of these breakeven prices to reach 75% of HECO's average production costs. These data highlight the difficulties in establishing rates for this type of large energy development. I've seen similar situations with regard to the importation of Canadian energy into the U.S. With the James Bay hydro plants, prior to the commitment to build the generation and transmssion facilities, the rate situation looked similar to what we are seeing now for the geothermal -- HWDC projects. Once the hydro facilities were constructed in northern Canada, the rate problem disappeared and both U.S. and Canadian utilities were agreeable to entering into contracts with prices based on a fixed percent of the cost of oil generation in the U.S. systems."