EP 1130-2-510
13 Dec 96
APPENDIX M
ECONOMIC ANALYSIS GUIDANCE
It is not intended that a Major Rehabilitation Evaluation Report be prepared for each
rewind project. The level of detail should be commensurate with the complexity of the project.
The analysis should draw on the basic framework outlined in the current "Guidance for Major
Rehabilitation Projects."
M-1. General. Economic evaluations for rewind letter reports should be conducted in
accordance with the analytic requirements for Major Rehabilitation Evaluation Reports (see ER
1130-2-500, Chapter 3). This methodology combines estimated equipment reliability, the
probability of unsatisfactory performance (failure), and the physical and economic consequences
of failure, in computing the life cycle costs of the alternatives being considered. While major
rehabilitation proposals may be expensive and require significant analysis to support a
recommendation, generator rewinds are limited in scope and cost. Therefore, the analysis to
support rewind recommendations, should be limited.
M-2. Requirements. For a forced rewind (see Chapter 6 of ER 1130-2-510, Hydroelectric Power
Operations and Maintenance Policies), the letter of support from the Power Marketing Agency, is
sufficient justification for the proposed action and an economic analysis is not needed. For all
other rewind proposals, the economic rewind study requirements are listed below.
a. Development of the Base Condition. The base condition is the alternative to which all
other plans will be measured against. The following items should be considered in the
development of the base condition.
(1) Assume that the project will be operated in the most efficient manner possible in the
absence of the proposed rewind. If the project benefit stream is interrupted due to unsatisfactory
feature (generator) performance, assume that funds will be made available to fix the feature.
(2) The timing, frequency and physical consequences of system disruptions are all
unknown and must be estimated. The costs and durations of prior failures is important and useful
information in estimating economic consequences and in establishing a pattern of failures. This
information should be available from the Hydroelectric Design Center and District Operations
personnel.
(3) Assumptions should be reasonable and clearly stated. Rely on available data where
possible.
(4) The potential for minor failures (a repairable outage of short duration) should be
considered in addition to failures that require a full generator rewind.
(5) The units use and availability must be considered relative to other units at the specific
project. Plant factors and operational characteristics (peaking versus base load) will impact the
economic value of replacement.
b. Alternatives. Only a limited number of alternatives need to be addressed for rewind
letter reports. Alternatives (3) and (4) have very limited application.
M-1
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