Issues Paper, Central Utah Project

Page 105

?<p. 43 tion (in annual terms) is $10,460,000.* The "annual average equivalent allocated costs" of the irrigation areil2,786,000. Thus the irrigation part of the project, even using the BR's exaggerated agricultural benefits, produces a net annual loss of $2,326,000 per year. The B/C ratio on it is 0.82 even using 3 1/4% cost of capital. On the other hand, the preliminary BR analysis of a pump-back energy system indicates that annual energy benefits could be increased from $8.8 million to $31.5 million at an additional capital cost of about $60 million.** Using the BR 3.22 percent capital cost, this suggests a B/C ratio of 6.2! As discussed above, one cannot easily adjust the BR energy benefits to a different capital cost. If one accu­rately adjusted for a 7 percent capital cost, one would get a smaller B/C ratio of about 3.0--if one accepts BR data. Clearly, combining the irrigation project with the power project will produce an apparently rational project. However, one can have pump-back peaking energy without irrigation. The Corps of Engineers has inventoried dozens of places in the West which have the geographic features which allow this type of peak power production. Most have nothing to do with irrigation. The projects involve two storage basins and a continuous recylcing of the water: pumping it up during off-peak hours *BR, "Preliminary Information," op. cit. , point 5. **BR, "Bonneville Unit: Alternative Plans," March 21, 1977, no page numbers.