- Due Diligence Review & Determination of Value
We completed a due diligence review of the Kauai Power Partners (KPP) gas turbine electric generating plant for the Kauai Island Utility Cooperative (KIUC). The KPP generating facility is based on a GE Aero Energy Products LM2500 steam-injected gas turbine. Based on our due diligence review there was nothing from a technical perspective that would prevent KIUC from proceeding with purchasing the KPP generating facility. With proper operation and maintenance the plant should be capable of 30 to 35 years of operation.
- Property inspections
- Management interviews
- Data review
- Analysis and development of depreciation rates
- Study report and presentation
As part of the study, our team evaluated the fuel systems at the KPP generating facility. The gas turbine operates on either No. 2 fuel or naphtha. Naphtha is considered the primary fuel and No. 2 fuel oil is used for startup, normal shutdown and backup. The unloading and storage facilities are duplicated for each fuel. An as-received tank receives fuel from truck delivery. The fuels are then pumped through filters and transferred to clean tanks. The capacity of the as-received tanks equals the two clean tanks. Fuel is then pumped from the clean tanks to the gas turbine fuel skid. This skid is common for both fuels. A three-position valve changes the fuel supply to the fuel injection pumps on the GE skid. Therefore, from these pumps to the engine, there is just one fuel system.
We also completed development of the replacement cost estimate for the KPP generating facility. The estimated replacement cost as of June 30, 2003, is more than $42 million. The original costs of the project, including equipment costs, other plant, engineering and labor were evaluated in developing the estimated replacement cost. The estimated replacement cost did not include owner costs, such as permitting, interest during construction, land, and legal and other fees. Our team visited the plant site and observed the facility to be in a condition to be expected for a facility of this type that had been in operation less than a year.