Adding dam would bring rate hike

"The short version is, it's very expensive," Skeahan said. "When you take a look at the report, what it says is, the process of making the project economically beneficial to the PUD would be long, arduous, expensive, and uncertain."

Condit Dam, built in 1913, is situated on the White Salmon River, about 3.3 miles from confluence with the Columbia River.

Based on estimates included within the 16-page draft report, Skeahan said it would cost roughly $64 a megawatt hour on average to operate the dam for electricity.

"It's not even close," Skeahan said. "This is an expensive proposition. If this [$64] figure is high even by a factor of one-third, you still can't get there."

Skeahan explained that if the costs per megawatt hour were steady in the $45-$50 range, then it might be worthwhile to take a further look.

"At this level of analysis, the Condit Hydroelectric Project is not a cost-effective resource alternative," concluded Curtis Bagnall, vice president of CH2M Hill, in the report. "Unless many of the required project modifications are no longer required, it does not appear Condit is an attractive resource."

"To determine the attractiveness of the project [Condit Dam] as a resource to the PUD, we estimated the annual cost of power from the project and compared it with the cost of power from a natural gas fired combined-cycle combustion turbine and the cost of expansion of the H.W. Hill landfill gas power project," read an excerpt from the CH2M Hill report. "For Condit power to be competitive ... the total financed cost would need to be no more than $32 million. Condit project power would be more expensive than power from a new large gas-fired project for at least the first 20 years of PUD ownership."

The results projected the costs for power generated from Condit Dam at 6.4 cents per kilowatt hour. By comparison, the cost for a new natural-gas fired combustion turbine plant were projected to be about 5.0 cents per kilowatt hour, while costs for project expansion at the landfill gas plant were projected at about 6.0 cents per kilowatt hour.

The study estimated the cost to finance acquisition of Condit Dam at $63.5 million.

Skeahan said the difference between 6.4 cents per kilowatt hour and five or six cents per kilowatt hour made a big difference.

"Put a pencil to it, and it's real money," he explained.

Skeahan added that if the PUD were to purchase Condit Dam as a resource for electricity production, it would lead to rate increases for PUD customers.

"The number [increase] will be big," Skeahan said.

Even with the dam's proposed maximum capacity (after possible upgrades) of 15.8 megawatts (MW), the study estimated that it would reliably generate less than half that on average. Based on projected energy production under the "relicensing with modifications" alternative, the firm power production would average 6.84 MW of electricity annually.

The CH2M report also estimates that, due to the regulatory process, the earliest the PUD could get power output from the Condit Dam hydroelectric facility would be 2010.

With the three members of the PUD Board of Commissioners regarded as "generally fiscally conservative," Skeahan said he thought it was unlikely the commissioners would vote to pursue obtaining Condit Dam.

"I can't believe this board would do something that costs this much," Skeahan said.

The PUD plans to schedule public meetings in both Goldendale and White Salmon, probably sometime in mid-January, to present findings from the engineer's study to the public.

The engineering study cost the PUD approximately $10,000.

PUD Commissioners Dan Gunkel and Randy Knowles could not be reached for comment as of press time on Tuesday.