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pulpwood, round wood, or for biomass fuel-include fuel price adjustment clauses reflecting diesel fuel and other inflatiodescalation factors. 3. Logistical considerations, including the ability to maintain an on-site fuel inventory sufficient to minimize weather-related fuel supply disruptions. 4. Average fuel moisture content is also a critical factor for power generation, because it impacts the usable energy content of the fuel. Therefore, fuel prices cannot reasonably be based on a delivered cost per ton without adjusting for moisture content. In other words, for power generation the biomass fuel should be purchased on an energy basis, not on a weight basis. 5. The energy content of woody biomass in Btu per pound drymatter basis is relatively consistent, ranging from about 8,300 to 8,700 Btu per pound; most of this variation reflects the tree species make-up or the bark fraction of the delivered &el. 6. Theavailabilityofharvestslashandotherforestbiomassfuelsmaybegreatly affected by the economic vigor of the existing forest products industry, in addition to seasonal variations, primarily reflecting reduced access to forestlands during wet winters. Other supply disruptions could result from inclement weather a n d o r natural disasters. The cost of in-woods harvesting and processing (i.e., gathering, chipping and loading the forest biomass) will depend on: (i) the extent of harvesting/collecting/gatheringefforts required (which, in turn,will be affected by the type of timber harvesting methods used at the particular site); (ii) the extent of in-woods chipping required (a f i c t i o n of the type of chipper, particle size requirements, and equipment productivity); and (E)whether the material has to be forwarded from the harvesting/processing site to an alternate load-out location. Chipped forest biomass is typically transported in either end-dump trailers (i.e., "chip vans" that are unloaded by truck lift dumps) or live bottom trailers that are self-unloading (e.g., walkingfloors,conveyorbottom,orotherstyles). Transportationcostscommonlyconsistofa base (fixed) price per load, plus a variable per-mile charge (typically incorporating a fuel price index for minimizing diesel price risks by the hauler). Short distance hauls can be 100% fixed cost, whereas long distance hauls can be 100%variable cost. Increasesindieselfuelpricesaffectoperatingcostsateverypointinthesupplychain. A typical strategy for reducing the potential volatility of delivered biomass cost increases is to index the costs to one or more mutually acceptable indices. The most common index method, and one that is widely used in transportation contracts (including the transportation of timber or pulp chips to forest products manufacturing companies), is to index transportation costs to diesel fuelpricesmaintainedbytheUSDepartmentofEnergy. Thepricesarepublishedweeklyfor eight regions across the US." " http://www.eia.doe.gov/ooglinfo/wohdp/diesel.asp 5 PD.8360793.2PDF Image | THE APPLICATION OF KENTUCKY POWER
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