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UNITED STATES OF AMERICA

BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION

APPLICATION FOR PRELIMINARY PERMIT
WESTERN CATSKILLS HYDRO PROJECT
FERC NO. _____

Applicant
DELAWARE COUNTY ELECTRIC COOPERATIVE

MAY 2008
TABLE OF CONTENTS
Initial Statement 1
Additional Information (18 CFR §4.32) 2

Exhibit 1 – Project Description 5
1.1. Existing and Proposed Facilities 6
1.2. Impoundments 13
1.3. Turbines and Generators 14
1.4. Transmission Lines 14
1.5. Lands of the United States 15
1.6. Public Interest 15

Exhibit 2 – Description of Studies 17
2.1. Studies Process 17
2.2. Studies to be Completed 17
2.3. Roads 19
2.4. New Dam Construction 20
2.5. Schedule for Studies 20

Exhibit 3 – Cost and Financing 21
3.1. Estimated Costs 21
3.2. Financial Sources 21
3.3. Proposed Market 21

Exhibit 4 – Project Maps 22

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INITIAL S TA TEMENT
Before the Federal Energy Commission

1. Delaware County Electric Cooperative (DCEC) applies to the Federal Energy
Regulatory Commission for a preliminary permit for the proposed Western
Catskills Hydro Project water power project, as described in the attached exhibits.
This application is made in order that the applicant may secure and maintain
priority of application for a license for the project under Part I of the Federal
Power Act while obtaining the data and performing the acts required to determine
the feasibility of the project and to support an application for a license.

2. The location of the proposed project is:

State: New York
County: Schoharie, Delaware and Sullivan
Township: Gilboa, Deposit, Colchester and Neversink
Stream: Schoharie Creek, West Branch Delaware River, East
Branch Delaware River and Neversink River

3. The exact name, business address, telephone number and email address of the
applicant are provided below.

Delaware County Electric Cooperative
39 Elm Street, P.O. Box 471
Delhi, NY 13753
Tel: (607) 746-2341
Fax: (607) 746-7548
Email: greg.starheim@dce.coop

The exact name, business address, telephone number and email address of each
person authorized to act as agent for the applicant in this application are provided
below.

Gregory J. Starheim, CEO and General Manager
Delaware County Electric Cooperative
39 Elm Street, P.O. Box 471
Delhi, NY 13753
Tel: (607) 746-9281
Fax: (607) 746-7548
Email: greg.starheim@dce.coop

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Jeffrey C. Genzer, Esq.
Duncan Weinberg Genzer & Pembroke, PC
1615 M Street, N.W., Suite 800
Washington, D.C. 20036
Tel: (202) 467-6370
Fax: (202) 467-6379
Email: JCG@dwgp.com

James A. Besha, P.E.
Albany Engineering Corporation
5 Washington Square
Albany, NY 12205
Tel: (518) 456-7712
Fax: (518) 456-8451
Email: jim@albanyengineering.com

4. The applicant is incorporated as a 501(c)-12 business corporation pursuant to the
Rural Electric Cooperative Law, Laws of New York, 1942, Chapter 566. DCEC is
not claiming preference under section 7(a) of the Federal Power Act.

5. The proposed term of the requested permit is 36 months.

6. The Western Catskills Hydro Project comprises four development sites. All four
sites are located at water supply reservoirs that are within the comprehensive,
hydraulically linked “West of Hudson” water resource system that is owned and
operated by the City of New York. The name and address of the owner of the
dams that will be used as part of the project facilities is:

New York City
Department of Environmental Protection
Bureau of Water Supply
71 Smith Avenue
Kingston, NY 12401

ADDITIONAL INFORM ATION (1 8 C FR §4 . 3 2 )
1. DCEC intends to obtain and will maintain any proprietary right necessary to
construct, operate or maintain the project.

2. Listed below are the names and mailing addresses of entities affected by the
Western Catskills Hydro Project including counties of location and cities, towns
and similar local political subdivisions in which any part of the project would be
located or that has a population of 5,000 or more people located within a 15-mile
radius of the project dams.

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2.1. Counties:

Broome County Chenango County
County Administrator County Chairman
PO Box 1766, 44 Hawley Street 5 Court Street
Binghamton, NY 13902 Norwich, NY 13815

Delaware County Greene County
Chairman, Board of Supervisors County Administrator
111 Main Street 411 Main Street, PO Box 467
Delhi, NY 13753 Catskill, NY 12414

Schoharie County Sullivan County
Chairman, Board of Supervisors County Chairman
County Office Building 100 North Street, PO Box 5012
284 Main Street Monticello, NY 12701
Schoharie, NY 12157
Susquehanna County Ulster County
County Commissioner County Chairman
County Courthouse, PO Box 218 PO Box 1800, 244 Fair Street
Montrose, PA 18801 Kingston, NY 12402

Wayne County
County Commissioner
925 Court Street
Honesdale, PA 18431

2.2. Municipalities:

Town of Fallsburg Town of Liberty
Town Supervisor Town Supervisor
19 Railroad Plaza South 120 North Main Street
Fallsburg, NY 12779 Liberty, NY 12754

Town of Rochester Town of Thompson
Town Supervisor Town Supervisor
50 Scenic Road, P.O. Box 65 4052 Route 42
Accord, NY 12404 Monticello, NY 12701

Town of Walton Town of Wawarsing
Town Supervisor Town Supervisor
129 North Street 108 Canal Street, P.O. Box 671
Walton, NY 13856-1217 Ellenville, NY 12428

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Town of Andes Town of Colchester
Town Supervisor Town Supervisor
580 Main Street 72 Tannery Road, PO Box 321
Andes, NY 13731 Downsville, NY 13755

Town of Conesville Town of Deposit
Town Supervisor Town Supervisor
1306 State Route 990V 3 Elm Street
Gilboa, NY 12076 Deposit, NY 13754

Town of Gilboa Town of Middletown
Town Supervisor Town Supervisor
373 State Route 990V 42339 State Hwy 28, PO Box 577
Gilboa, NY 12076 Margaretville, NY 12455

Town of Neversink Town of Prattsville
Town Supervisor Town Supervisor
273 Main Street, PO Box 307 14517 Main Street
Grahamsville, NY 12740 Prattsville, NY 12468

Town of Roxbury Town of Tompkins
Town Supervisor Town Supervisor
53690 State Hwy 30, PO Box 189 148 Bridge Street, PO Box 139
Roxbury, NY 12474 Trout Creek, NY 13847

2.3. The four development sites comprising the Western Catskills Hydro Project are
located at water supply reservoirs that are within the comprehensive,
hydraulically linked “West of Hudson” water resource system that is owned and
operated by the City of New York. There are no irrigation districts, drainage
districts or other political subdivisions known to be located within the project
area.

2.4. There are no other political subdivisions in the general area of the project that
there is reason to believe would likely be interested in, or affected by, the
application.

2.5. There are no known Indian tribes that may be affected by the project.

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EXHIBIT 1 – PRO JECT DESCRIPTION
The proposed Western Catskills Hydro Project is a new waterpower project that will be
developed by Delaware County Electric Cooperative (“DCEC”).

The Western Catskills Hydro Project comprises four development sites. All four sites are
located at water supply reservoirs that are within the comprehensive, hydraulically linked
“West of Hudson” water resource system that is owned and operated by the City of New
York. The four development sites are identified below.

Western Catskills Hydro Project
Development Sites
Development Dam River
Schoharie Gilboa Schoharie Creek
Cannonsville Cannonsville West Branch Delaware River
Pepacton Downsville East Branch Delaware River
Neversink Neversink Neversink River (tributary to Delaware River)

Certain of the developments within the Western Catskills Hydro Project have previously
been the subjects of proceedings before the Federal Energy Regulatory Commission
(FERC) brought by New York City Department of Environmental Protection and others
during the period from about 1983 to 1990. None of these proceedings resulted in
construction of new generating facilities, although, in certain cases authorization was
granted and then subsequently terminated or surrendered. The Applicant has reviewed the
available information regarding these past proceedings and has developed the proposed
Western Catskills Hydro Project to respond to and mitigate the critical issues identified in
the prior proceedings. In proposing a comprehensive plan and standardized design
elements to develop this currently underutilized hydroelectric resource, it is anticipated
that the Western Catskills Hydro Project will be constructed and operated in an
environmentally beneficial and economic manner.

SCHOH AR IE DEVEL OP MENT

The Gilboa Dam was constructed in 1926 to impound the Schoharie Creek in the Town
of Gilboa and create the Schoharie Reservoir. Upgrades to the existing dam and spillway
by the New York City Department of Environmental Protection are scheduled to take
place in the near future as part of the Gilboa Dam restoration project. The Schoharie
Reservoir extends approximately six miles upstream and has a surface elevation of 1,130
feet mean sea level, a surface area of 1,150 acres and a storage capacity of approximately
95,575 acre-feet. Water from the Schoharie Reservoir used by the New York City system
is diverted south through the Shandaken Tunnel. The Schoharie Development of the
Western Catskills Hydro Project will utilize available flow from Schoharie Reservoir that
is surplus to New York City’s requirements.

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C A NN ONS VI L LE DEVEL OP MENT

The dam impounding the Cannonsville Reservoir was constructed in 1964 to impound the
West Branch of the Delaware River in the Town of Deposit. The Cannonsville Reservoir
extends approximately 12 miles upstream and has surface elevation of 1,171.5 feet, a
surface area of 4,800 acres and a storage capacity of approximately 300,000 acre-feet.
The Cannonsville Development of the Western Catskills Hydro Project will utilize
available flow from Cannonsville Reservoir that is surplus to New York City’s
requirements.

PEP AC TO N DEVEL OP MENT

The Downsville Dam was built in 1954 to impound the East Branch of the Delaware
River in the Town of Colchester and create the Pepacton Reservoir. The Pepacton
Reservoir extends approximately 17.6 river miles upstream and has a surface area of
6,400 acres at the spillway crest and storage capacity of approximately 430,000 acre-feet.
The Pepacton Development of the Western Catskills Hydro Project will utilize available
flow from Pepacton Reservoir that is surplus to New York City’s requirements.

NEVERS I NK DEVEL OP MENT

The dam impounding the Neversink Reservoir was constructed in 1953 to impound the
Neversink River in the Town of Neversink. The Neversink Reservoir extends
approximately 5.4 river miles upstream and has a surface area of 1,500 acres and storage
capacity of approximately 170,000 acre-feet. The Neversink Development of the Western
Catskills Hydro Project will utilize available flow from Neversink Reservoir that is
surplus to New York City’s requirements.

1. 1 EXISTING AND PROPOSED FACILITIES
The Western Catskills Hydro Project has been designed to provide standardization and
modularization of individual hydraulic structures, civil structures, hydraulic equipment
and electrical equipment to the greatest extent possible. This will provide significant
economies of design, fabrication, procurement, construction, operation and maintenance.

The type of water intake and conveyance has been selected to provide minimal intrusion
and impact on the New York City water supply system dams and reservoirs. All facilities
proposed for the Western Catskills Hydro Project are physically separate from New York
City’s water supply intakes, spillways and conveyance structures. The design of the water
intakes has been selected to permit prefabrication and to minimize both construction and
long-term effects on the embankment dams and reservoir. They have been designed to
include positive exclusion fish protection and selective elevation withdrawal to minimize,
and possibly enhance, environmental effects. Water conveyance will utilize a
standardized siphon penstock design that does not pass through the impermeable core of
the existing embankment dams.

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The powerhouses are modular in design and will be equipped with one, two or four
turbine/generator units, depending on the site. The turbine/generator systems have been
selected to provide identical units at all the development sites, which will maximize
economic advantage in procurement. The types of units selected will provide efficient
operation over a broad range of flows.

Switchgear, controls and interface to the electrical grid are also of modular design to
permit economies of procurement, installation, operation and maintenance.

SCHOH AR IE DEVEL OP MENT

Schoharie Develop ment – Existing Project Features

• An existing earthen dam approximately 2,273 feet long and 183 feet high with a
concrete overflow spillway to the Schoharie Creek. The Gilboa Dam was built in
1926 by New York City to impound the Schoharie Creek and create the Schoharie
Reservoir as a water supply resource. Modifications were made to the dam in
2006 to improve its structural stability. The New York City Department of
Environmental Protection plans to further upgrade the existing dam and spillway
in 2008-2011 as part of its Gilboa Dam restoration project. This work is expected
to include the re-surfacing of the entire face of the dam and re-construction of the
overflow structure, including a directional spillway and vanes, the installation of a
crest gate on the adjacent bypass discharge spillway and a tunnel with an intake
structure and control gates along with a discharge release plenum downstream of
the dam.

• The Schoharie Reservoir extends approximately six miles upstream and has a
surface elevation of 1,130 feet, a surface area of 1,150 acres and a storage
capacity of approximately 95,575 acre-feet.

Schoharie Develop ment – Proposed Project Features

1. An intake system consisting of four individual prefabricated steel intake
chambers, rectangular in shape with an inclined top opening composed of screen
panels with 0.25-inch openings. Design velocity normal to the screen is 0.5 feet
per second. Each intake chamber will rest on the existing embankment dam with a
foundation loading of less than 200 pounds per square foot. Each intake chamber
will be equipped with an automated rotary cleaning device and an adjustable “roll
up” shutter to permit elevation-specific withdrawal of water based on thermal or
other criteria. Each intake chamber will be connected to a steel penstock, eight
feet in diameter. Two of the intake chambers will be equipped with submersible
electric pump systems to be used for delivering minimum flows below the siphon
suction head limit. Normal headwater elevation ranges from a maximum of 1,130
feet to a minimum operating level of 1,110 feet.

2. The conveyance system consists of four identical steel penstocks, each eight feet
in diameter, operated as sub-atmospheric siphons from the reservoir level, at or

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below spillway elevation, to the pressure portion of the penstocks. Siphon eductor
equipment, siphon break valves and control equipment will be located near the
apex of the penstock system at the non-overflow embankment dam crest.
Penstocks will be lined with epoxy coating suitable for potable water contact.
Buried portions of the penstocks will be coated. Exposed portions of the
penstocks will be uncoated “weathering type” steel. Penstocks will be ring
stiffened and rest on concrete foundation piers. The penstocks will terminate at
the powerhouse.

3. A powerhouse constructed of reinforced concrete and enclosing the four turbines
and generators, medium voltage switchgear and controls. The powerhouse will be
founded on rock and discharge to the natural stream channel just downstream of
the toe of the existing embankment dam. A tailrace channel will be excavated
approximately 100 feet in length with a nominal tailwater elevation of 965 feet.

4. Four state-of-the-art, high-efficiency Deriaz or high head Kaplan type turbines
each with a hydraulic capacity of 525 cubic feet per second at the design head of
165 feet. Design flow for the Schoharie Development is 2,100 cfs, with a
minimum operating flow for one unit of 50 cfs.

5. Four direct coupled, vertical, synchronous generators each rated at 6,000
kilowatts at 0.8 power factor, 80ºC rise and operated at 5,875 kW. Total operating
capacity for the Schoharie Development will be 23,500 kW.

6. Medium voltage unit switchgear consisting of generator unit circuit breakers,
potential transformers, current transformers and protective devices. Appropriate
station service equipment and excitation systems. An automated control system
linked in real time to the DCEC dispatch center.

7. Underground generator leads approximately 500 feet in length connected to a 13.8
kV to 34.5 kV substation with step-up transformer rated at 30 MVA, primary
circuit breaker, lightning protection and protective relaying.

8. An aerial subtransmission line approximately 13,000 feet in length, operating at
34.5 kV.

9. Interconnection to an existing 115 kV subtransmission or transmission line owned
by New York State Electric & Gas Corporation. A 30 MVA. 34.5 kV/115 kV
step-up transformer and primary circuit breaker located at the point of grid
interconnection.

C A NN ONS VI L LE DEVEL OP MENT

Cannonsville Develop ment – Existing Project Features

• An existing rolled earthfill dam with a crest length of 2,800 feet, maximum height
of 175 feet, crest elevation of 1,175.0 feet and concrete overflow spillway to the
West Branch of the Delaware River. The spillway is an ungated, split-level

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overflow weir. The upper weir crest is 560 feet in length with a crest elevation of
1,158.0 feet. The lower weir crest is 240 feet in length with a crest elevation of
1,150.0 feet. Construction of the dam was completed in 1964 to impound the
West Branch of the Delaware River and create the Cannonsville Reservoir. The
reservoir was constructed by New York City as a water supply resource.

• The Cannonsville Reservoir extends approximately 12 miles upstream and has a
surface elevation of 1,171.5 feet, a surface area of 4,800 acres and a storage
capacity of approximately 300,000 acre-feet.

• An existing 46 kV transmission line that is part of the existing New York State
Electric & Gas Corporation electrical distribution system that passes downstream
of the dam across the West Branch of the Delaware River.

Cannonsville Develop ment – Proposed Project Features

1. An intake system consisting of four individual prefabricated steel intake
chambers, rectangular in shape with an inclined top opening composed of screen
panels with 0.25-inch openings. Design velocity normal to the screen is 0.5 feet
per second. Each intake chamber will rest on the existing embankment dam with a
foundation loading of less than 200 pounds per square foot. Each intake chamber
will be equipped with an automated rotary cleaning device and an adjustable “roll
up” shutter to permit elevation-specific withdrawal of water based on thermal or
other criteria. Each intake chamber will be connected to a steel penstock, eight
feet in diameter. Two of the intake chambers will be equipped with submersible
electric pump systems to be used for delivering minimum flows below the siphon
suction head limit. Normal headwater elevation ranges from a maximum of 1,150
feet to a minimum operating level of 1,130 feet.

2. The conveyance system consists of four identical steel penstocks, each eight feet
in diameter, operated as sub-atmospheric siphons from the reservoir level, at or
below spillway elevation, to the pressure portion f the penstocks. Siphon eductor
equipment, siphon break valves and control equipment will be located near the
apex of the penstock system at the non-overflow embankment dam crest.
Penstocks will be lined with epoxy coating suitable for potable water contact.
Buried portions of the penstocks will be coated. Exposed portions of the
penstocks will be uncoated “weathering type” steel. Penstocks will be ring
stiffened and rest on concrete foundation piers. The penstocks will terminate at
the powerhouse.

3. A powerhouse constructed of reinforced concrete and enclosing the four turbines
and generators, medium voltage switchgear and controls. The powerhouse will be
founded on rock and discharge to the natural stream channel just downstream of
the toe of the existing embankment dam. A tailrace channel will be excavated
approximately 100 feet in length with a nominal tailwater elevation of 1,000 feet.

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4. Four state-of-the-art, high-efficiency Deriaz or high head Kaplan type turbines
each with a hydraulic capacity of 500 cubic feet per second at the design head of
150 feet. Design flow for the Cannonsville Development is 2,000 cfs, with a
minimum operating flow for one unit of 50 cfs.

5. Four direct coupled, vertical, synchronous generators each rated at 6,000
kilowatts at 0.8 power factor, 80ºC rise and operated at 5,125 kW. Total operating
capacity for the Cannonsville Development will be 20,500 kW.

6. Medium voltage unit switchgear consisting of generator unit circuit breaker,
potential transformers, current transformers and protective devices. Appropriate
station service equipment and excitation systems. An automated control system
linked in real time to the DCEC dispatch center.

7. Underground generator leads approximately 100 feet in length connected to a 13.8
kV to 46 kV substation with step-up transformer rated at 30 MVA, primary circuit
breaker, lightning protection and protective relaying.

8. An existing aerial subtransmission line to be upgraded to a 46 kV
subtransmission/distribution line.

9. Interconnection to an existing 46 kV subtransmission line owned by New York
State Electric & Gas Corporation.

PEP AC TO N DEVEL OP MENT

Pepacton Develop ment – Existing Project Features

• An existing zoned earth embankment with a concrete core wall founded on rock.
The Downsville Dam is approximately 2,450 feet in length and has a maximum
height of 254 feet. The top width of the dam is approximately 45 feet and the
bottom width at grade is approximately 2,000 feet. Construction of the
Downsville Dam was completed in 1954 to impound the East Branch of the
Delaware River and create the Pepacton Reservoir, which was completed in 1955.
The Pepacton Reservoir was constructed by New York City as a water supply
resource. The major spillway, located near the north end of the Downsville Dam,
is an uncontrolled side channel spillway with an ogee crest. The side channel
discharges into a concrete lined tunnel, 40-feet in diameter. The crest of the weir
is approximately 800 feet long and the tunnel is approximately 1,530 feet long.
The spillway crest is at elevation 1,280 feet.

• The Pepacton Reservoir extends approximately 17.6 river miles upstream and has
a surface area of 6,400 acres at the spillway crest and storage capacity of
approximately 430,000 acre-feet.

• The existing surface gatehouse structure is equipped with three-phase, 4.8 kV
distribution service.

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Pepacton Develop ment – Proposed Project Features

1. An intake system consisting of four individual prefabricated steel intake
chambers, rectangular in shape with an inclined top opening composed of screen
panels with 0.25-inch openings. Design velocity normal to the screen is 0.5 feet
per second. Each intake chamber will rest on the existing embankment dam with a
foundation loading of less than 200 pounds per square foot. Each intake chamber
will be equipped with an automated rotary cleaning device and an adjustable “roll
up” shutter to permit elevation-specific withdrawal of water based on thermal or
other criteria. Each intake chamber will be connected to a steel penstock, eight
feet in diameter. One of the intake chambers will be equipped with submersible
electric pump systems to be used for delivering minimum flows below the siphon
suction head limit. Normal headwater elevation ranges from a maximum of 1,280
feet to a minimum operating level of 1,260 feet.

2. The conveyance system consists of two identical steel penstocks, each eight feet
in diameter, operated as sub-atmospheric siphons from the reservoir level, at or
below spillway elevation, to the pressure portion f the penstocks. Siphon eductor
equipment, siphon break valves and control equipment will be located near the
apex of the penstock system at the non-overflow embankment dam crest.
Penstocks will be lined with epoxy coating suitable for potable water contact.
Buried portions of the penstocks will be coated. Exposed portions of the
penstocks will be uncoated “weathering type” steel. Penstocks will be ring
stiffened and rest on concrete foundation piers. The penstocks will terminate at
the powerhouse.

3. A powerhouse constructed of reinforced concrete and enclosing the two turbines
and generators, medium voltage switchgear and controls. The powerhouse will be
founded on rock and discharge to the natural stream channel just downstream of
the toe of the existing embankment dam. A tailrace channel will be excavated
approximately 100 feet in length with a nominal tailwater elevation of 1,095 feet.

4. Two state-of-the-art, high-efficiency Deriaz or high head Kaplan type turbines
each with a hydraulic capacity of 555 cubic feet per second at the design head of
185 feet. Design flow for the Pepacton Development is 1,110 cfs, with a
minimum operating flow for one unit of 50 cfs.

5. Two direct coupled, vertical, synchronous generators each rated at 6,000 kilowatts
at 0.8 power factor, 80ºC rise and operated at 6,250 kW (105ºC rise). Total
operating capacity for the Pepacton Development will be 12,500 kW.

6. Medium voltage unit switchgear consisting of generator unit circuit breaker,
potential transformers, current transformers and protective devices. Appropriate
station service equipment and excitation systems. An automated control system
linked in real time to the DCEC dispatch center.

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7. Underground generator leads approximately 400 feet in length connected to a 13.8
kV to 46 kV substation with step-up transformer rated at 15 MVA, primary circuit
breaker, lightning protection and protective relaying.

8. An aerial subtransmission line approximately 800 feet in length operating at 46
kV.

9. Interconnection to an existing 46 kV subtransmission line owned by New York
State Electric & Gas Corporation.

NEVERS I NK DEVEL OP MENT

Neversink Develop ment – Existing Project Features

• An existing earth embankment with a concrete cutoff wall founded on rock and
extending from the rock foundation up to an elevation of 160 feet below the top of
the dam at its center and slopes up to an elevation of 20 feet below the top of the
dam near the abutments. Construction of the dam was completed in 1953 to
impound the Neversink River, a tributary to the Delaware River, and create the
Neversink Reservoir, which was completed in 1954. The Neversink Reservoir
was constructed by New York City as a water supply resource. The major
spillway, located near the northeast end of the dam, is an uncontrolled side
channel spillway with an ogee crest. The side channel discharges into a concrete
lined tunnel, 30-feet in diameter. The crest of the waste weir is approximately 600
feet long and the tunnel is approximately 1,435 feet long. The spillway crest is at
elevation 1,440 feet.

• The Neversink Reservoir extends approximately 5.4 river miles upstream and has
a surface area of 1,500 acres and storage capacity of approximately 170,000 acre-
feet.

• Existing distribution facilities along State Route 55 and an existing 4.8 kV
transmission line.

Neversink Develop ment – Proposed Project Features

1. An intake system consisting of four individual prefabricated steel intake
chambers, rectangular in shape with an inclined top opening composed of screen
panels with 0.25-inch openings. Design velocity normal to the screen is 0.5 feet
per second. Each intake chamber will rest on the existing embankment dam with a
foundation loading of less than 200 pounds per square foot. Each intake chamber
will be equipped with an automated rotary cleaning device and an adjustable “roll
up” shutter to permit elevation-specific withdrawal of water based on thermal or
other criteria. Each intake chamber will be connected to a steel penstock, eight
feet in diameter. The intake chamber will be equipped with a submersible electric
pump system to be used for delivering minimum flows below the siphon suction

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head limit. Normal headwater elevation ranges from a maximum of 1,440 feet to a
minimum operating level of 1,420 feet.

2. The conveyance system consists of a single steel penstocks, eight feet in diameter,
operated as a sub-atmospheric siphon from the reservoir level, at or below
spillway elevation, to the pressure portion f the penstocks. Siphon eductor
equipment, siphon break valves and control equipment will be located near the
apex of the penstock at the non-overflow embankment dam crest. The penstock
will be lined with epoxy coating suitable for potable water contact. Buried
portions of the penstock will be coated. Exposed portions of the penstock will be
uncoated “weathering type” steel. The penstock will be ring stiffened and rest on
concrete foundation piers. The penstock will terminate at the powerhouse.

3. A powerhouse constructed of reinforced concrete and enclosing the turbine and
generator, medium voltage switchgear and controls. The powerhouse will be
founded on rock and discharge to the natural stream channel just downstream of
the toe of the existing embankment dam. A tailrace channel will be excavated
approximately 100 feet in length with a nominal tailwater elevation of 1,255 feet.

4. A state-of-the-art, high-efficiency Deriaz or high head Kaplan type turbine with a
hydraulic capacity of 555 cubic feet per second at the design head of 185 feet.
Design flow for the Neversink Development is 555 cfs, with a minimum
operating flow of 50 cfs.

5. A direct coupled, vertical, synchronous generator rated at 6,000 kilowatts at 0.8
power factor, 80ºC rise and operated at 6,500 kW (105ºC rise). Total operating
capacity for the Neversink Development will be 6,500 kW.

6. Medium voltage unit switchgear consisting of generator unit circuit breaker,
potential transformers, current transformers and protective devices. Appropriate
station service equipment and excitation system. An automated control system
linked in real time to the DCEC dispatch center.

7. Generator leads approximately 300 feet in length connected to a 13.8 kV to 34.5
kV substation with step-up transformer rated at 7.5 MVA, primary circuit breaker,
lightning protection and protective relaying.

8. Interconnection to an existing 34.5 kV subtransmission line owned by New York
State Electric & Gas Corporation.

1. 2 . IM POUNDM ENTS
All four of the development sites within the Western Catskills Hydro Project will operate
in run-of-river mode and therefore will not utilize any impoundment storage capacity.

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Western Catskills Hydro Project
Impoundment Information
Normal Water Surface Storage
Development Surface Elevation Area Capacity
(feet MSL) (acres) (acre-feet)
Schoharie 1,130 1,150 95,575
Cannonsville 1150 4,800 300,000
Pepacton 1,280 6,400 430,000
Neversink 1,440 1,500 107,000

1. 3 . TURBINES AND GEN ERATORS
Each of the four development sites will include construction of a new, overflow type
powerhouse that will house the new generating equipment, which will consist of state-of-
the-art, high efficiency Deriaz type turbines and vertical generators.

Western Catskills Hydro Project
Design Parameters
Average
Hydraulic Hydraulic Installed
Annual
Development Units Head Capacity Capacity
Generation
(feet) (cfs) (kW)
(kWh)
Schoharie 4 165 2,100 23,500 23,900,000
Cannonsville 4 150 2,000 20,500 46,500,000
Pepacton 2 185 1,110 12,500 16,700,000
Neversink 1 185 555 6,500 4,000,000

1. 4 . TRANSMISSION LINES
The electrical grid interface for each development within the Western Catskills Hydro
Project is summarized below.

Western Catskills Hydro Project
Electrical Grid Interface Information
Step-up
Unit Total Interface
Transformer
Development Units Capacity Capacity Voltage
Capacity
(MW) (MW) (kV)
(MVA)
Schoharie 4 5.9 23.5 30 34.5/115
Cannonsville 4 5.1 20.5 30 46
Pepacton 2 6.3 12.5 15 46
Neversink 1 6.5 6.5 7.5 34.5

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At each of the four development sites, the generator leads (13.8 kV) from the switchgear
will exit the powerhouse underground to minimize aesthetic impact and for security and
safety considerations. The underground leads will terminate at the step-up substations
where voltage will be stepped-up to either subtransmission or transmission voltage for
delivery to the electrical grid system. Grid interface will occur at the end of a
subtransmission line for the Schoharie Development and at the substations for the
Cannonsville, Pepacton and Neversink Developments.

1. 5 . LANDS OF TH E UNITED STATES
There are no lands of the United States included within the proposed project boundary.

There are no known areas within or in the vicinity of the proposed project boundary that
are included in or have been designated for study for inclusion in the National Wild and
Scenic Rivers System.

There are no areas within the proposed project boundary that are known to be under the
provisions of the Wilderness Act or that have been designated as wilderness area,
recommended for designation as wilderness area, or designated as wilderness study.

1. 6 . PUBLIC INTEREST
DCEC is a non-profit, rural electric cooperative serving over 5,100 members throughout
Delaware, Schoharie, Otsego and Chenango Counties of New York State. DCEC is one
of the over 900 electric cooperatives throughout the United States that serve
approximately 17% of the U.S. population and over 65% of the U.S. geography. Inherent
to its corporate structure, DCEC is owned by the membership that it serves and, as a non-
profit entity, is focused entirely on providing reliable, low-cost energy to its membership
while being good stewards to the local communities where its employees and directors
reside.

DCEC intends to produce electric power by constructing the Western Catskills Hydro
Project to utilize the clean, renewable public resource available at the four development
sites. It is anticipated that the power produced from the project will be used by DCEC to
serve its growing electrical demand of its residential, commercial and industrial
membership in the immediate area of the projects while selling surplus power into the
New York Independent System Operator (NYISO).

DCEC currently relies on the New York Power Authority (NYPA) for its entire supply of
wholesale power. This supply is partially supported by a fixed-price contract the
cooperative has with NYPA as part of NYPA’s Niagara Project License that extends
through 2025. DCEC is a preference customer of the NYPA. The remaining wholesale
supply is purchased off the NYISO market. The cooperative has experienced a substantial
increase in its power supply costs associated with market conditions and unpredictable
NYISO charges.

15
DCEC has initiated a strategy to hedge against the risks and costs of these issues. This
has included the development of innovative technology projects including load control
and peak shaving projects, the implementation of energy efficiency projects and the
development of local renewable energy projects. This strategy will allow the cooperative
to continue to deliver power to local communities at the lowest possible costs and
supporting environmentally responsible (and local) sources of power. Many of these
project initiatives, including the Western Catskills Hydro Project, will contribute to the
New York State Renewable Portfolio Standard.

DCEC is an industry leader in the development of renewable energy projects with
experience in commercial wind energy, residential fuel cell installations, substation
energy storage (advanced battery systems for peak shaving), and landfill gas recovery
usage (currently under construction) along with other project initiatives. The Western
Catskills Hydro Project is part of the cooperatives overall portfolio to achieve these
objectives while supporting local economic development.

16
EXHIBIT 2 – DESCIPTION OF STUDIES

2. 1 . STUDIES PROCESS
DCEC will utilize in-house resources to provide financial and planning related studies.
DCEC also intends to utilize the consulting services of Albany Engineering Corporation
for technical assistance in preparing, conducting or contracting the necessary studies for
the proposed project. Albany Engineering has extensive experience in the development,
design, construction, commissioning, operation and maintenance of hydroelectric
facilities.

2. 2 . STUDIES TO BE COM PLE TED
The studies and related work to be completed will provide the applicant with the
necessary information to prepare the application for license and to progress the concept
development plan to final design. All work will be conducted in a manner so as not to
affect cultural resources or endangered species, if any, and to cause minimal disturbance
to the land and water. Any land altered or disturbed will be adequately restored to the
satisfaction of the owner. The applicant proposes to carry out the studies below to
determine the feasibility of the proposed project and support an application for license.
As the studies are being conducted the applicant will consult with appropriate federal,
state, municipal and local agencies. The exact scope and scheduling of studies will be
coordinated in accordance with consultation related to the integrated licensing process.

2.2.1 GENER AL P L A N A ND SURVEY

A general plan and survey of the proposed project will be prepared to delineate the
topographic characteristics of each development site and approximate size, location and
elevations of existing and proposed facilities. Review of pertinent New York City
Department of Environmental Protection documents and studies will be performed for
each development site.

2.2.2 GEOTECH NI C AL S TUDIES

All available geotechnical studies performed for the dam and reservoir construction at the
four development sites comprising the Western Catskills Hydro Project will be reviewed.
A current geotechnical analysis of reservoir shoreline slope stability will also be
performed at each site. The analysis will include recommendations for improvements in
bank stability where appropriate.

2.2.3 WATER QU AL I T Y S TU DIES

Water quality studies will be performed to characterize water resources within the four
development sites comprising the Western Catskills Hydro Project. Data collection for
water quality will consist of reviewing existing data as well as performing new field

17
sampling. Water quality characteristics of interest will be primarily dissolved oxygen,
temperature and flow. Field sampling will occur within the project vicinity. A follow-up
data collection phase will also be conducted post-construction.

2.2.4 REC REAT I O N AL S TUDIES

Analysis will be performed to assess potential use of the project area for non-contact
recreational activities. Facilities to be analyzed will include shoreline fishing access and
picnic areas with parking. All recreational access locations will comply with the
Americans With Disabilities Act. Consistency of the proposed project with relevant
comprehensive plans will be considered. Only uses appropriate to NYCDEP
requirements for protection of water supply will be considered. It is noted that NYCDEP
has permitted non-contact use at all four reservoirs comprising the Western Catskills
Hydro Project, including a current plan for allowing sailboat access specifically at
Cannonsville Reservoir.

2.2.5 HISTOR I C A ND AR CH AEOL OG I C AL S TUDIES

Any previous Phase 1A Literature Review and Archaeological Assessment or Phase 1B
field survey of any areas identified as sensitive that have already been conducted will be
reviewed. An approved cultural resource management firm will perform the necessary
data collection and analysis for historic and archeological resources. This work will
include a Phase 1A Literature Review and Archeological Assessment and may include a
Phase 1B field survey of any areas likely to be disturbed at the four development sites
that are identified as sensitive.

2.2.6 FISHER IES AND WIL DL I FE S TUDIES

Field investigations will include a detailed reconnaissance by wildlife and fisheries
biologists. Identification and mapping of species will be performed and reported. Data
collection will include compilation of species inventories and data, especially pertaining
to the trout species present as well as riverine warm water sport species.

A study will be conducted to characterize the existing wildlife resources within the four
development sites comprising the Western Catskills Hydro Project. Existing available
wildlife resources information and data will be reviewed. Field reconnaissance surveys
will be performed to characterize representative wildlife habitats and the species
composition, relative abundance, and overall health in the project area. Review will
include inspection of existing aerial photography for terrestrial communities providing
wildlife refuge in the project area, inspection of existing land use maps, and observations
of habitat specific wildlife species occurrences during field reconnaissance survey.
Evaluation will be made of the effects of project construction, operation and other related
activities on botanical and wildlife resources.

A field reconnaissance survey of the study area will be conducted to observe
representative terrestrial communities and associated wildlife habitat. Terrestrial habitats
available within the project area will be described. Available habitat will be compared

18
against habitat requirements of known wildlife from the region to develop the list of
species most likely to occur within the project area. Wildlife lists will be compiled for the
common species found in the project area.

2.2.7 P REL I M I N AR Y DES IG N S TUDIES

Preliminary engineering designs for each of the four development sites will be prepared
to delineate the scope, cost and schedule for construction. A projection of energy
generation will also be made. The preliminary design data will be utilized in the
economic analysis to be preformed for the proposed project sites.

2.2.8 EC ONOM I C AN AL YSES

Economic analyses of the proposed project will be performed. The analysis will include
estimates of power production and power sales rates. Economic criteria such as net
revenue, net present value and benefit/cost ratio will be determined.

2. 3 ROADS
SCHOH AR IE DEVEL OP MENT

Access to the Schoharie Development will be from an existing access road to the Gilboa
Dam and spillway area. No new roads will be built for the purpose of conducting the
studies referenced herein. No new road construction is presently anticipated to be
necessary to access the proposed new powerhouse and substation.

C A NN ONS VI L LE DEVEL OP MENT

Access to the proposed Cannonsville Development will be from the primary NYCDEP
access road that leads off of State Route 10. The roadway provides access to the existing
release water chamber and to the dam and spillway crest. No new road construction is
presently anticipated to be necessary to access the proposed new powerhouse and
substation.

PEP AC TO N DEVEL OP MENT

Access to the proposed Pepacton Development will be from the existing access road that
traverses the top of the dam from State Route 30. No new road construction is presently
anticipated to be necessary to access the proposed new powerhouse and substation.

NEVERS I NK DEVEL OP MENT

A steel arch bridge carries State Route 55 across the emergency spillway channel to the
dam, providing access to the proposed Neversink Development. No new road
construction is presently anticipated to be necessary to access the proposed new
powerhouse and substation.

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2. 4 NEW DAM CONSTRUCTION
The proposed project will utilize the existing dams at the Schoharie, Cannonsville,
Neversink and Pepacton Reservoirs. Accordingly, a waiver of the requirements of
Section 4.81(c)(2) is requested because no new dam construction under the definition of
Section 4.81(c)(2) is proposed.

2. 5 SCH EDULE FOR STUDIES
The following schedule has been developed for conducting the studies and consultations
specified herein and leading up to the submission of a license application to the
Commission at the conclusion of the requested 36-month term of the permit. This
schedule assumes that a permit will be issued to the DCEC by June 2008. Based on the
work to be performed under the requested permit, DCEC will make a determination as to
whether it is appropriate to follow the Integrated Licensing Process or request a waiver
for the Alternative Licensing Process.

Permit Issued July 2008

Perform Studies July 2008 – June 2010

Complete Initial Environmental Analyses November 2010

File Draft License Application December 2010

File License Application at FERC May 2011

20
EXHIBIT 3 – COS T AND FINANCING

ESTI MATED COSTS
The estimated cost of carrying out and preparing the studies, investigations, tests, and
surveys identified in Exhibit 2 is $562,500, allocated as follows.

General Plan and Survey $ 50,000
Geotechnical Analysis 80,000
Water Quality Analysis 67,500
Recreation Study 67,500
Historic and Archaeological Study 80,000
Fisheries Studies 67,500
Preliminary Design Study 100,000
Economic Analysis 50,000
Total $ 562,500

FINANCIAL SOURCES
The applicant will provide the necessary financing to conduct the activities identified in
Exhibit 2.
PROPOSED M ARKET
DCEC is a non-profit, rural electric cooperative serving over 5,100 members throughout
Delaware, Schoharie, Otsego and Chenango Counties of New York State.

DCEC intends to produce electric power by constructing the Western Catskills Hydro
Project to utilize the clean, renewable public resource available at the four development
sites. It is anticipated that the power produced from the project will be used by DCEC to
serve its growing electrical demand of its residential, commercial and industrial
membership in the immediate area of the projects while selling surplus power into the
New York Independent System Operator (NYISO).

21
EXHIBIT 4 – PRO JECT MAPS
The following maps and preliminary drawings are provided for the proposed Western
Catskills Hydro Project.

Drawing
Development Title
No.
0001 Western Catskills Hydro Development Key Map/Drainage-Use
Project Relationship
0002 Schoharie USGS Quadrangle Map
0003 Schoharie Project Boundary Map
0008 Schoharie Existing and Proposed Facilities Map
0009 Schoharie Section Along Penstock
0010 Schoharie Intake System Plan
0011 Schoharie Powerhouse Plan
0012 Schoharie Section Along Waterway
0014 Cannonsville USGS Quadrangle Map
0015 Cannonsville Project Boundary Map
0020 Cannonsville Existing and Proposed Facilities Map
0021 Cannonsville Section Along Penstock
0022 Cannonsville Intake System Plan
0023 Cannonsville Powerhouse Plan
0024 Cannonsville Section Along Waterway
0026 Pepacton USGS Quadrangle Map
0027 Pepacton Project Boundary Map
0032 Pepacton Existing and Proposed Facilities Map
0033 Pepacton Section Along Penstock
0034 Pepacton Intake System Plan
0035 Pepacton Powerhouse Plan
0036 Pepacton Section Along Waterway
0038 Neversink USGS Quadrangle Map
0039 Neversink Project Boundary Map
0044 Neversink Existing and Proposed Facilities Map
0045 Neversink Section Along Penstock
0046 Neversink Intake System Plan
0047 Neversink Powerhouse Plan
0048 Neversink Section Along Waterway

22
Schoharie
County

Schoharie Development
(Schoharie Reservoir)
_
^
Greene
Delaware County
County New York
State

Broome
County Pepacton Development
(Pepacton Reservoir)

_
^ _
^
Cannonsville Development
(Cannonsville Reservoir)

Ulster
County

Neversink Development_
^
(Neversink Reservoir)
State of
Pennsylvania To NYC
Sullivan
County

To NYC

_
^ Developments

Western Catskills Hydro Project Aqueduct
Development Key Map/Drainage-Use Relationship River/Creek
Date
4/21/2008
By
EMH
Drawing
0001 County Boundaries 0 5
o10 15 20
*Drainage to Non Development Reservoirs Miles
Not Shown for Clairity