THE APPLICATION OF KENTUCKY POWER

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These components (Owner Furnished Equipment or OFE) are procured by the Owner at project start, prior to EPC contract NTP. They are assigned to the EPC contractor at that time. Estimates of Owner costs that are in addition to the EPC contract cost are tabulated in Section 6.0. 2.3 EPC Cost Estimate Pricing for the major Balance of Plant equipment including the generator step-up transforiners were obtained from actual pricing and budgetary quotes received from vendors for similar recent projects and proposals. The plant construction cost estimates were developed based on data froin recent EPC projects. Labor rates and productivity factors for the following five (5) geographical areas were verified and used to develop the direct and indirect costs. * * 2) Charles County, Maryland 1)Middlesex County, New Jersey * 3 ) Will County, Illinois * 4) Northampton County, Pennsylvania 0 5) Fauquier County, Virginia The constructioi-~cost estimates are based on direct labor hire (concrete, steel, piping, electrical and instrumentation) and specialty subcontract union (locations 1,3, and 4) and merit shop craft labor (locations 2 and 5). Quantities for bulks were determined from plants similar in size and configuration. Historical data was utilized to provide an overall parametric check of account values of the completed estimate. Labor Locations 1,3,and 4: Union craft labor rates were determined from prevailing wages for the area. Rates were built-up including the base rate, fringes and legalities. The estimate is based on a 50 hour craft work week. A labor factor of 1.1was applied to the CSA accounts, 1.3for the piping accounts, and 1.2on all other accounts and based on various factors including location, working in an existing facility, congestion, local labor conditions, weather and schedule. Locations 2 and 5: Merit sliop craft labor rates were determined from prevailing wages for the area. Rates were built-up including the base rate, fringes and legalities. The estimate is based ona50hourcraftworkweek. Alaborfactorof1.0wasappliedtoallaccountsbasedonvarious factors. A $50 per day per diem has been included. Escalation The cost estimates are provided in June 2011 dollars and escalation was included based on the following schedules. Craft labor was escalated at 4.0% for 2011 and beyond. Engineered equipment and bulk inaterials were escalated at 6%for 2011 and beyond. Professional labor and construction indirect expenses were escalated at 3% for 2011 and 4%for 2012 and beyond. Specialty subcontracts were escalated at 5%for 2011 and beyond. Page 6 of 24 The Bruttle Group 2/11I RIM CONE Study ttppendk Puge A-9 0 0

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