12 AirHeaterLeakage PDF

Financial Impact Reporting
for
Combustion Air Preheaters
A Communication Problem
Making engineering arguments

in a financially driven world:
• Different paradigms
• Different decision drivers
• Different pressures
• Environment of uncertainty
Build a Communication Bridge…
…in 5 steps:
1) Performance calcs
2) What do they mean?
(in English, please…)
3) Financial parameters
4) Itemize financial impacts
5) Financial metrics
Step 1
Engineering Calculations
• Use data from plant historian
• ASME PTC 4.0 and 4.3
• Report key operating variables including:
 Output (gross and net)
 Station service
 Heat rate and efficiency
 Air heater leakage rate
 Capacity losses
STEP 1: HOW AIR HEATER LEAKAGE IS IMPACTING TECHNICAL PLANT PERFORMANCE
Condition On Condition On Condition On Condition On
Reference Case Condition On Condition On SOURCE OF
DESCRIPTION Symbol Units 12/03/2015 (at 12/03/2015 01/13/2016 01/13/2016
05/23/2015 10/06/2015 12/11/2015 REPORTED VALUE
968 MW) (1007 MW) (Handheld) (Station)
Gross Power PGross kWe 960,000 961,300 968,000 955,000 1,007,000 1,001,200 1,001,200 I-O
Uncorrected Net Power PNetm kWe 936,000 937,268 943,800 931,125 981,825 976,170 976,170 I-O
PSSm kWe 24,000 24,033 24,200 23,875 25,175 25,030 25,030 =PGross -PNetm
Station Service (Uncorrected)
% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% =PSSm/PGross *100
Adjusted Net Power PNeta kWe 875,751 875,192 881,563 868,765 918,065 910,682 910,194 =PGross -PSSA
PSSa kWe 84,249 86,108 86,437 86,235 88,935 90,518 91,006 =PGross -PNeta
Station Service (Adjusted)
% 8.78% 8.96% 8.93% 9.03% 8.83% 9.04% 9.09% =PSSa/PGross *100
Fuel Flow Rate (Used in Analysis) mfuel Lb/Hr 809,293 813,835 786,514 787,303 819,164 818,876 819,443 From Analysis Tab
Fuel Flow Rate (Calculated) mfuelCalc Lb/hr 814,793 813,835 786,514 787,303 819,164 818,876 819,443 From Analysis Tab
Fuel Heating Value HVfuel BTU/Lb 11,685 11,733 11,733 11,833 11,733 11,775 11,775 From I-O
Gross Heat Rate HRGross BTU/kWh 9,851 9,933 9,533 9,755 9,544 9,631 9,637 =(mFuel * HVfuel)/PGross
Net Heat Rate HRNetm BTU/kWh 10,103 10,188 9,778 10,005 9,789 9,878 9,884 =(mFuel * HVfuel)/PNetm
Adjusted Net Heat Rate HRNeta BTU/kWh 10,798 10,910 10,468 10,723 10,469 10,588 10,601 =(mFuel * HVfuel)/PNeta
Undiluted Gas Temperature Leaving AH T geUD F 344 390 380 383 382 381 397 From Analysis Tab
Boiler Efficiency Boiler % 85.98% 85.38% 84.46% 84.87% 84.49% 83.82% 83.76% From Analysis Tab
Change in Boiler Eff since last reading tot % 0.61% 0.92% NA NA NA 1.10% =Boileri-1 - BoilerActi
Change in Boiler Eff from Ref Case  % 0.61% 1.52% NA NA NA 2.22% =BoilerBA - BoilerAct
%WT 9.22% 11.06% 14.54% 14.29% 14.75% 12.49% 17.76% From Analysis Tab
Air Heater Leakage Leak
lb/hr 872,901 1,061,440 1,356,340 1,338,701 1,407,174 1,248,582 1,708,668 From Analysis Tab
lb/hr 188,539 294,901 N/A N/A N/A 352,327 Leakcurrent - Leakprevious

Change in Leakage since last reading Leakst
% 21.6% 27.8% N/A N/A N/A 26.0% Leakst/Leakprevious
lb/hr 188,539 483,439 N/A N/A N/A 835,767 Leakcurrent - LeakBA

Change in Leakage from Ref Case Leaklt
% 21.6% 55.4% N/A N/A N/A 95.7% Leaklt/LeakBA
ID Fan Flow Rate (as tested) VIDF acfm 910,616 1,011,513 968,625 1,002,189 996,255 1,034,000 1,041,702 From Analysis Tab
ID Fan Static Pressure (as tested) PIDF in-H20 -33.5 -39.2 -37.7 -39.1 -38.8 -39.8 -39.8 From Fans and Pumps
Step 1
Summarizes key operating parameters:

• PTC 4.0, 4.3 completed but only briefly summarized
• Only values relevant to funding request
Not what you know, but what management needs to know to make a decision
Step 2
What am I looking at here?

• Chart key operating parameters
• Communicate core problem (smoking gun?)
• Demonstrate reliability of calculations
Enter Here
DB RH WB
95 80% 89
Three Methods
• Stoichiometric Analysis (combustion equations)
• First Law / Mass Balance (bulk flows)
• ASME PTC 4.0 & 4.3
Close agreement between methods and over time increases confidence

STEP 2e: VALIDATION OF ENGINEERING CALCULATIONS
Combustion Flue Gas Flow Comparison: UNITS TEST 1 TEST 2 TEST 3 NOTES
Total Flue Gas including Excess Air (Stoichiometric) lb/hr 1,847,669 1,670,402 1,618,510 Based on Stoichiometry with detailed N2 Analysis.
Total Flue Gas Based on First Law Analysis lb/hr 1,885,977 1,692,181 1,654,587 Based on Bulk Flow Measurements around Boiler
Total Flue Gas Based on End Result (Analysis 1 Exact) lb/hr 1,909,662 1,710,373 1,673,739 Based on End Result PTC 4.1 Calculations
3.25% 2.34% 3.30% Deviation highest to lowest values
STEP 2: VALIDATION OF ENGINEERING CALCULATIONS
Combustion Flue Gas Flow Comparison: UNITS TEST 1 TEST 2 TEST 3 NOTES
Total Flue Gas including Excess Air (Stoichiometric) lb/hr 520,975 512,477 526,298 Based on Stoichiometry with detailed N2 Analysis.
Total Flue Gas Based on First Law Analysis lb/hr 524,605 517,736 529,052 Based on Bulk Flow Measurements around Boiler
Total Flue Gas Based on End Result (Analysis 1 Exact) lb/hr 549,041 553,570 569,340 Based on End Result PTC 4.1 Calculations
lb/hr 535,008 533,024 547,819 Midpoint Between Highest and Lowest Values
2.62% 3.85% 3.93%Deviation Above and Below this Midpoint Value

Step 2
Answers key questions:

• What am I looking at here?
• Why should I believe this?
You have now established the technical situation

Step 3
Cost of Inputs & Assumptions

• Values nominated by customer
• Values calculated
• Values from regulatory filings
Values used to financialize results of technical calculations

STEP 3: COST OF PLANT INPUTS & FINANCIAL ASSUMPTIONS
Description Source Units Unit Value Notes
DOE EIA-923
Fuel cost, delivered but not including fuel treatment and EIA-860 $ / MBTU $1.91 From Materials $
Reports
Days per year, total − − 275 From Cost Est
Operating hours per year − − 6,600 Calculated Value
Fuel cost as % of total generating cost (for cross-check and validation) − − 66% Input
DOE EIA-923
Monthly moving
Annual fuel consumption and EIA-860 Tons / yr 1,300,000 average times 12
Reports
Implied cost of generation (AECI Annual Report) − $ / MWH $27.91 Calculated Value
Weighted average sale price for power sold Est $ / MWH $50.00 Input
Average gross margin from power sold − $ / MWH $22.09 Calculated Value
Discount rate / cost of funds (for discounted cash flow analysis) − − 9.00% Input
3
SCR Chemicals ---NH (AGWY-0032) EPA $ / Lb. $0.45 From Materials $
SCR Catalyst EPA $ / m3 $6,000.00 From I-O
Hg Mitigation--CyClean Additive Hg Web $ / ton Fuel $1.20 From Materials $
Ash Disposal EPA $ / ton Ash $60.00 From I-O
Scrubber Makeup Water EPA $ / 1000 Gal N/A From I-O
Scrubber Waste Disposal EPA $ / 1000 Lb. N/A From I-O
FGD Materials--Limestone or Other EPA $ / 1000 Lb. N/A From I-O

STEP 3: COST OF PLANT INPUTS & FINANCIAL ASSUMPTIONS
Description Source Units Unit Value Notes
Fuel cost, delivered but not including fuel treatment Site $ / MBTU $2.15 From I-O
Days per year, total Site − 347 From I-O
Operating hours per year Site − 8,328 Calculated Value
Implied cost of generation Site $ / MWH $31.02 From I-O
Weighted average sale price for power sold Site $ / MWH $65.00 From I-O
Average gross margin from power sold Site $ / MWH $33.98 Calculated Value
Discount rate / cost of funds (for discounted cash flow analysis) − − 9.00% Input
3
SCR or Boiler Chemicals ---NH (AGWY-0032) EPA $ / Lb. $0.45 From Materials $
3
SCR Catalyst EPA $/m $6,000.00 From I-O
Hg Mitigation--CyClean Additive Hg Web $ / ton Fuel N/A From I-O
Ash Disposal Site $ / ton Ash $2.00 From I-O
Boiler or Scrubber Makeup Water EPA $ / 1000 Gal $15.00 From I-O
Scrubber Waste Disposal EPA $ / 1000 Lb. N/A From I-O
FGD or Boiler SO2 Control Materials--Limestone or Other EPA $ / 1000 Lb. $30.00 From I-O
Step 4
Itemized list of financial impacts:

• Everything – fuel pile to top of chimney
• All values associated with station service
• Gross margin loss associated with de-rates
Snapshot in time – what has this cost me over the last 12 months?
180 MW, 27.4%, GEN STEP 4: ITEMIZED LIST OF FINANCIAL IMPACTS
TEST 1 TEST 2 TEST 3 VALUES USED IN DISCOUNTED

CASH FLOW IMPACT BASIS Reference Case
01/01/2015 08/05/2015 01/19/2016 CASH FLOW ANALYSIS
Due to loss of boiler efficiency: Based on current condition 0 -570,907 -316,617 -324,439 (319,876)
cost of fuel + consumables Change since last reading -570,907 254,290 -7,822
Cumulative change since ref case -570,907 -316,617 -324,439
Due to increase in station service: Based on current condition 0 -10,443 -38,804 -24,626 (32,896)
cost of fuel + consumables Change since last reading -10,443 -28,361 14,178
Due to increase in emission control inputs: Based on current condition 0 -2,430 -9,114 -5,772 (7,721)
cost of consumables Change since last reading -2,430 -6,684 3,342
Based on current condition 0 -26,400 -99,000 -62,700 (83,875)

Gross margin loss due to increase in station service Change since last reading -26,400 -72,600 36,300
Based on current condition 0 -613,800 -5,243,700 -6,161,100 (5,625,950)

Gross margin loss due to reduction in plant output Change since last reading -613,800 -4,629,900 -917,400
Cumulative change since ref case -613,800 -5,243,700 -6,161,100
TOTAL CASH FLOW IMPACT Based on current condition 0 -1,223,981 -5,707,235 -6,578,636 (6,070,319)
Change since last reading -1,223,981 -4,483,254 -871,402

CHANGE IN TOTAL CASH FLOW IMPACT
Cumulative change since ref case -1,223,981 -5,707,235 -6,578,636
960 MW, 17.8%, GEN STEP 4: ITEMIZED LIST OF FINANCIAL IMPACTS
Condition On Condition On Condition On Condition On

Reference Case Condition On Condition On VALUES USED IN DISCOUNTED
CASH FLOW IMPACT BASIS 12/03/2015 12/03/2015 01/13/2016 01/13/2016
05/23/2015 10/06/2015 12/11/2015 CASH FLOW ANALYSIS
(at 968 MW) (1007 MW) (Handheld) (Station)
Due to loss of boiler efficiency: Based on current condition 0 -1,060,499 -3,686,228 -1,504,035 -3,512,291 -4,912,745 -5,037,719 (1,822,850)
cost of fuel + consumables Change since last reading -1,060,499 -2,625,728 NA NA NA -1,351,491
Cumulative change since ref case -1,060,499 -3,686,228 NA NA NA -5,037,719
Due to increase in station service: Based on current condition 0 -325,169 -265,738 -443,786 -100,556 -479,505 -568,001 (498,382)
cost of fuel + consumables Change since last reading -325,169 59,431 NA NA NA -302,264
Cumulative change since ref case -325,169 -265,738 NA NA NA -568,001
Due to increase in emission control inputs: Based on current condition 0 -56,524 -48,131 -78,551 -18,192 -85,970 -101,766 (72,493)
cost of consumables Change since last reading -56,524 8,393 NA NA NA -53,635
Based on current condition 0 -483,597 -411,788 -672,049 -155,639 -735,522 -870,665 (430,971)
Gross margin loss due to increase in station service Change since last reading -483,597 71,809 NA NA NA -458,877
Based on current condition 0 0 0 0 0 0 0 (6,652,863)

Gross margin loss due to reduction in plant output Change since last reading 0 0 0 0 0 0
Cumulative change since ref case 0 0 0 0 0 0
TOTAL CASH FLOW IMPACT Based on current condition 0 -1,925,789 -4,411,884 -2,698,421 -3,786,678 -6,213,742 -6,578,151 (9,477,558)
Change since last reading -1,925,789 -2,486,095 NA NA NA -2,166,267

Cumulative change since ref case -1,925,789 -4,411,884 NA NA NA -6,578,151
Ambient Dry Bulb Temperature Tested Measured Value 69 91 48 64 45 30 30 Basis of values in this
Ambient Wet Bulb Temperature Tested Measured Value 65 76 44 63 39 26 26 column: seven months at
average of observed values
Loss of boiler efficiency -75,631 98,451 -299,427 -98,773 -328,471 -352,952 -423,871
Cash flow impacts corrected to show values plus five months at most
Increase in station service -203,604 31,022 -429,280 -261,217 -475,176 -635,176 -635,174 recent values shown in
under typical peak season weather conditions:
Emission control costs -23,798 3,626 -50,176 -30,532 -55,540 -74,242 -74,241 yellow section for 75.2°F
wet bulb.
If dry bulb temperature, °F = 88.0 Gross margin, station service -58,018 8,840 -122,326 -74,435 -135,404 -180,997 -180,996
and if relative humidity, % = 56% Gross margin, output reduction -2,603,813 800,188 -15,993,366 -8,886,829 -16,653,869 -15,995,060 -15,966,872
Then wet bulb temperature, °F = 75.2 TOTAL -2,964,864 942,128 -16,894,575 -9,351,786 -17,648,459 -17,238,428 -17,281,154
650 MW, 28.3%, GEN 4: ITEMIZED LIST OF FINANCIAL IMPACTS
VALUES USED IN DISCOUNTED

CASH FLOW IMPACT BASIS Case 1 08/02/2015 01/04/2016
CASH FLOW ANALYSIS
Due to loss of boiler efficiency: Based on current condition 0 98,528 -239,206 (239,206)
cost of fuel Change since last reading 98,528 -337,734
Cumulative change since ref case 98,528 -239,206
Due to increase in station service: Based on current condition 0 -386,483 -246,314 (246,314)
cost of fuel Change since last reading -386,483 140,168
Cumulative change since ref case -386,483 -246,314
Due to increase in emission control inputs: Based on current condition 0 -197,005 -578,052 (578,052)
cost of consumables Change since last reading -197,005 -381,047
Based on current condition 0 -441,133 -275,680 (275,680)

Gross Revenue loss due to increase in station
Change since last reading -441,133 165,452
service
Based on current condition 0 -153,334 -857,386 (857,386)

Gross margin loss due to reduction in plant output Change since last reading -153,334 -704,053
TOTAL CASH FLOW IMPACT Based on current condition 0 -1,079,426 -2,196,639 (2,196,639)
Change since last reading -1,079,426 -1,117,213

Cumulative change since ref case -1,079,426 -2,196,639
17 MW, 25.3%, PM STEP 4: ITEMIZED LIST OF FINANCIAL IMPACTS
VALUES USED IN
EST. BEST MIMIC DATA
CASH FLOW IMPACT BASIS DISCOUNTED CASH
ACHIEVABLE 6/17/16
FLOW ANALYSIS
Due to loss of boiler efficiency: Based on current condition 0 -25,989 (25,989)

cost of fuel due to lower efficiency Change since last reading -25,989
Cumulative change since ref case -25,989
Due to increase in aux load, Based on current condition 0 -404,310 (404,310)

cost of fuel due to increase in aux load Change since last reading -404,310
Due to increase in emission control costs: Based on current condition 0 -3,555 (3,555)
cost of ash disposal Change since last reading -3,555
Due to increase in aux load, Based on current condition 0 -327,074 (327,074)

cost of power purchased for facility Change since last reading -327,074
to replace power shifted to aux load Cumulative change since ref case -327,074
Due to increase in purchased power, Based on current condition 0 -495,463 (495,463)

to replace power that could be generated Change since last reading -495,463
for the same fuel input Cumulative change since ref case -495,463
TOTAL CASH FLOW IMPACT Based on current condition 0 -1,256,391 (1,256,391)
Change since last reading -1,256,391

Cumulative change since ref case -1,256,391
Step 4
What is leakage costing me?

• Must answer the question management
wants answered
• Largest dollars in aux power and de-rates
• Big problems can disappear (but only
temporarily, then return with a vengeance!)
Step 5
Financial Metrics
• Engineering disappears from conversation
• Calculate most common financial metrics
(but the way a CFO does it!)
• Competition for funding within organization
DISCOUNT / HURDLE RATE = 9.00%
STEP 5a: DISCOUNTED CASH FLOW ANALYSIS, 5-YEAR

180 MW, 27.4%, GEN Year = 1 2 3 4 5 TOTAL
Total improvement in operating cash flow (from Step 4,

6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 30,000,000
right-most column, rounded down)
Project cost:
Cost of repair, vendor contract (4,000,000)
Other owner costs, est (250,000)
NET CHANGE IN CASH FLOW, CURRENT YEAR 1,750,000 6,000,000 6,000,000 6,000,000 6,000,000 25,750,000
Cumulative cash flow 1,750,000 7,750,000 13,750,000 19,750,000 25,750,000

Discount Factor = 0.917 0.842 0.772 0.708 0.650
Discounted cash flow in current year 1,605,505 5,050,080 4,633,101 4,250,551 3,899,588
CUMULATIVE DISCOUNTED CASH FLOW 1,605,505 6,655,585 11,288,685 15,539,237 19,438,825

Year = 1 2 3 4 5 6 7 8 9 10 TOTAL

6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 60,000,000
Project cost:
NET CHANGE IN CASH FLOW, CURRENT YEAR 1,750,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 55,750,000
Cumulative cash flow 1,750,000 7,750,000 13,750,000 19,750,000 25,750,000 31,750,000 37,750,000 43,750,000 49,750,000 55,750,000
Discount Factor = 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422
Discounted cash flow in current year 1,605,505 5,050,080 4,633,101 4,250,551 3,899,588 3,577,604 3,282,205 3,011,198 2,762,567 2,534,465
CUMULATIVE DISCOUNTED CASH FLOW 1,605,505 6,655,585 11,288,685 15,539,237 19,438,825 23,016,429 26,298,634 29,309,832 32,072,399 34,606,864
FINANCIAL METRICS, 5 YEAR FINANCIAL METRICS, 10 YEAR

Maximum capital-at-risk $ 4,250,000 Maximum capital-at-risk $ 4,250,000
Cash generated over 5 years $ 25,750,000 Cash generated over 10 years $ 55,750,000
Net present value $ 19,438,825 Net present value $ 34,606,864
Average cash flow per year $ 5,150,000 Average cash flow per year $ 5,575,000
Benefit-cost ratio 5.57 Benefit-cost ratio 9.14
Internal rate of return 139.38% Internal rate of return 141.16%
Payback in years 0.83 Payback in years 0.76
Payback in months 10.0 Payback in months 9.2
Percent of project recovered in year 1 141.2% Percent of project recovered in year 1 141.2%
DISCOUNT / HURDLE RATE = 9.00%
960 MW, 17.8%, GEN STEP 5a: DISCOUNTED CASH FLOW ANALYSIS, 5-YEAR
Year = 1 2 3 4 5 TOTAL

9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 47,000,000
Project cost:
NET CHANGE IN CASH FLOW, CURRENT YEAR 2,675,000 9,400,000 9,400,000 9,400,000 9,400,000 40,275,000
Cumulative cash flow 2,675,000 12,075,000 21,475,000 30,875,000 40,275,000

Discount Factor = 0.917 0.842 0.772 0.708 0.650
Discounted cash flow in current year 2,454,128 7,911,792 7,258,525 6,659,197 6,109,355
CUMULATIVE DISCOUNTED CASH FLOW 2,454,128 10,365,920 17,624,445 24,283,642 30,392,997

Year = 1 2 3 4 5 6 7 8 9 10 TOTAL

9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 94,000,000
Project cost:
NET CHANGE IN CASH FLOW, CURRENT YEAR 2,675,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 9,400,000 87,275,000
Cumulative cash flow 2,675,000 12,075,000 21,475,000 30,875,000 40,275,000 49,675,000 59,075,000 68,475,000 77,875,000 87,275,000
Discount Factor = 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422
Discounted cash flow in current year 2,454,128 7,911,792 7,258,525 6,659,197 6,109,355 5,604,913 5,142,122 4,717,543 4,328,021 3,970,662
CUMULATIVE DISCOUNTED CASH FLOW 2,454,128 10,365,920 17,624,445 24,283,642 30,392,997 35,997,910 41,140,032 45,857,575 50,185,596 54,156,258

DISCOUNT / HURDLE RATE = 9.00% Case 1 Repair only PA Tubluar AH
5a: DISCOUNTED CASH FLOW ANALYSIS, 5-YEAR

650 MW, 28.3%, GEN Year = 1 2 3 4 5 TOTAL

2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 11,000,000
Project cost:
NET CHANGE IN CASH FLOW, CURRENT YEAR (1,150,000) 2,200,000 2,200,000 2,200,000 2,200,000 7,650,000
Cumulative cash flow (1,150,000) 1,050,000 3,250,000 5,450,000 7,650,000

Discount Factor = 0.917 0.842 0.772 0.708 0.650
Discounted cash flow in current year (1,055,046) 1,851,696 1,698,804 1,558,535 1,429,849
CUMULATIVE DISCOUNTED CASH FLOW (1,055,046) 796,650 2,495,454 4,053,989 5,483,838
5a: DISCOUNTED CASH FLOW ANALYSIS, 10-YEAR

Year = 1 2 3 4 5 6 7 8 9 10 TOTAL

2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 22,000,000
Project cost:
NET CHANGE IN CASH FLOW, CURRENT YEAR (1,150,000) 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 2,200,000 18,650,000
Cumulative cash flow (1,150,000) 1,050,000 3,250,000 5,450,000 7,650,000 9,850,000 12,050,000 14,250,000 16,450,000 18,650,000
Discount Factor = 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422
Discounted cash flow in current year (1,055,046) 1,851,696 1,698,804 1,558,535 1,429,849 1,311,788 1,203,475 1,104,106 1,012,941 929,304
CUMULATIVE DISCOUNTED CASH FLOW (1,055,046) 796,650 2,495,454 4,053,989 5,483,838 6,795,626 7,999,102 9,103,208 10,116,149 11,045,452

DISCOUNT / HURDLE RATE = 9.00% OPTION 1

17 MW, 25.3%, PM Year = 1 2 3 4 5 TOTAL

1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 6,000,000
Project cost:
Cost of repair, vendor contract (290,000)
NET CHANGE IN CASH FLOW, CURRENT YEAR 890,000 1,200,000 1,200,000 1,200,000 1,200,000 5,690,000
Cumulative cash flow 890,000 2,090,000 3,290,000 4,490,000 5,690,000

Discount Factor = 0.917 0.842 0.772 0.708 0.650
Discounted cash flow in current year 816,514 1,010,016 926,620 850,110 779,918
CUMULATIVE DISCOUNTED CASH FLOW 816,514 1,826,530 2,753,150 3,603,260 4,383,178

Year = 1 2 3 4 5 6 7 8 9 10 TOTAL

1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 12,000,000
Project cost:
Cost of repair, vendor contract (290,000)
NET CHANGE IN CASH FLOW, CURRENT YEAR 890,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 11,690,000
Cumulative cash flow 890,000 2,090,000 3,290,000 4,490,000 5,690,000 6,890,000 8,090,000 9,290,000 10,490,000 11,690,000
Discount Factor = 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422
Discounted cash flow in current year 816,514 1,010,016 926,620 850,110 779,918 715,521 656,441 602,240 552,513 506,893
CUMULATIVE DISCOUNTED CASH FLOW 816,514 1,826,530 2,753,150 3,603,260 4,383,178 5,098,699 5,755,140 6,357,379 6,909,893 7,416,786

Maximum capital-at-risk $ 310,000 Maximum capital-at-risk $ 310,000
Lessons Learned
Three Key Discoveries

• Traditional practice waits too long to repair
• Main value drivers are power shift and de-rate
• These only matter when you make your money…
(…but by then it’s usually too late!)
Benefits of Financial Impact Reporting
• Builds bridge across the “Communication Canyon”

• Creates a more powerful inspection report
 Reveals hidden damage
 Provides second way of inspecting for damage
 Provides context for interpreting leakage data
• Powerful tool for controlling air heater repair costs
How To…
Step 1
• Gather basic info on system and equipment
• Review and mark up historian I/O list
• Long-term data on a just a few points
• Build model, identify key variables, select sample days
How To…
Step 2
• Comprehensive datasets for sample days
• Review and scrub data
• Load data and perform calculations
• Clarify anomalies and clean up details
• Build report
How To…
How fast can it be done?

• CMS part – generally 2-3 weeks
• Depends entirely on speed of delivery of
required information
• Works best if you designate technical
specialist in your organization to work with
us to gather and deliver data

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Financial Impact Reporting

Making engineering arguments

lb/hr 188,539 294,901 N/A N/A N/A 352,327 Leakcurrent - Leakprevious

lb/hr 188,539 483,439 N/A N/A N/A 835,767 Leakcurrent - LeakBA

Summarizes key operating parameters:

What am I looking at here?

Close agreement between methods and over time increases confidence

STEP 2: VALIDATION OF ENGINEERING CALCULATIONS

2.62% 3.85% 3.93%Deviation Above and Below this Midpoint Value

Answers key questions:

You have now established the technical situation

Cost of Inputs & Assumptions

Values used to financialize results of technical calculations

Description Source Units Unit Value Notes

Days per year, total − − 275 From Cost Est

Operating hours per year − − 6,600 Calculated Value

SCR Catalyst EPA $ / m3 $6,000.00 From I-O

Hg Mitigation--CyClean Additive Hg Web $ / ton Fuel $1.20 From Materials $

Ash Disposal EPA $ / ton Ash $60.00 From I-O

Scrubber Makeup Water EPA $ / 1000 Gal N/A From I-O

Scrubber Waste Disposal EPA $ / 1000 Lb. N/A From I-O

FGD Materials--Limestone or Other EPA $ / 1000 Lb. N/A From I-O

Description Source Units Unit Value Notes

Days per year, total Site − 347 From I-O

Operating hours per year Site − 8,328 Calculated Value

Implied cost of generation Site $ / MWH $31.02 From I-O

Hg Mitigation--CyClean Additive Hg Web $ / ton Fuel N/A From I-O

Ash Disposal Site $ / ton Ash $2.00 From I-O

Scrubber Waste Disposal EPA $ / 1000 Lb. N/A From I-O

Itemized list of financial impacts:

TEST 1 TEST 2 TEST 3 VALUES USED IN DISCOUNTED

Based on current condition 0 -26,400 -99,000 -62,700 (83,875)

Based on current condition 0 -613,800 -5,243,700 -6,161,100 (5,625,950)

Change since last reading -1,223,981 -4,483,254 -871,402

Condition On Condition On Condition On Condition On

Based on current condition 0 0 0 0 0 0 0 (6,652,863)

Change since last reading -1,925,789 -2,486,095 NA NA NA -2,166,267

VALUES USED IN DISCOUNTED

Based on current condition 0 -441,133 -275,680 (275,680)

Based on current condition 0 -153,334 -857,386 (857,386)

Change since last reading -1,079,426 -1,117,213

Due to loss of boiler efficiency: Based on current condition 0 -25,989 (25,989)

Due to increase in aux load, Based on current condition 0 -404,310 (404,310)

Due to increase in aux load, Based on current condition 0 -327,074 (327,074)

Due to increase in purchased power, Based on current condition 0 -495,463 (495,463)

TOTAL CASH FLOW IMPACT Based on current condition 0 -1,256,391 (1,256,391)

Change since last reading -1,256,391

What is leakage costing me?

STEP 5a: DISCOUNTED CASH FLOW ANALYSIS, 5-YEAR

Total improvement in operating cash flow (from Step 4,

Cumulative cash flow 1,750,000 7,750,000 13,750,000 19,750,000 25,750,000

STEP 5a: DISCOUNTED CASH FLOW ANALYSIS, 10-YEAR

Total improvement in operating cash flow (from Step 4,

FINANCIAL METRICS, 5 YEAR FINANCIAL METRICS, 10 YEAR

Total improvement in operating cash flow (from Step 4,

Cumulative cash flow 2,675,000 12,075,000 21,475,000 30,875,000 40,275,000

STEP 5a: DISCOUNTED CASH FLOW ANALYSIS, 10-YEAR

Total improvement in operating cash flow (from Step 4,

FINANCIAL METRICS, 5 YEAR FINANCIAL METRICS, 10 YEAR

5a: DISCOUNTED CASH FLOW ANALYSIS, 5-YEAR

Total improvement in operating cash flow (from Step 4,

Cumulative cash flow (1,150,000) 1,050,000 3,250,000 5,450,000 7,650,000

5a: DISCOUNTED CASH FLOW ANALYSIS, 10-YEAR