6. Public Interest Benefits

PacifiCorp states that it seeks to transfer the Skookumchuck Project to Washington LLC because a sale is a lower cost option than continuing to invest in and operate and maintain the Project.

The Project has an electrical capacity of 1 MW, but because the Project is operated to supply cooling water to the Centralia Power Plant, it has relatively low energy output. Over the last eight years, the average annual production has been 3,000 MW hours. The Project is interconnected with the distribution system of Puget Sound Energy, Inc., and historically all of the power from the Project has been sold to that company.

As one of the owners of the Project, PacifiCorp must pay its proportionate share of the costs of the Project. PacifiCorp states that its forecasts show that ratepayers will not be harmed by the proposed sale and in fact will benefit from it. The company's forecasts predict that ratepayers will see lower costs if the Project is sold because the projected cost of power from the Project substantially exceeds the projected cost of market power. Moreover, the expected impact of the sale is to lower the company's future revenue requirement by removing the Project from the company's rate base. According to PacifiCorp, the expected net present value of the future reduction in California revenue requirement is approximately $200,000.

According to the application, the proposed transaction eliminates the risk that PacifiCorp will be required to fund its share of expenditures for ensuring the structural integrity of the Skookumchuck dam. PacifiCorp's share of structural integrity work is estimated to be $4 million.

The application states:

The transfer of the Skookumchuck Project to Washington LLC is in the public interest because it will benefit PacifiCorp's customers by lowering the Company's cost of providing electrical service....In addition, the transfer will give TransAlta greater control of the water flows in the Skookumchuck River for providing cooling water to the Centralia Power Plant, thus increasing the electric output of the Centralia Power Plant for the benefit of all electricity consumers. (Application, at 10.)