The production cost will consider the effect from time value of money. At this stage of the study, a 10% discounted rate will be applied for the cash flow of 30 years. The project is assumed to undertake 3 years for construction period and 27 years of operation period. The production costs for the three alternative powerhouses are 6.67, 6.83 and 7.6 US cents/kWh for powerhouse at downstream of Keng Luang, the toe of dam and at right bank of Nam Ngoy respectively. The figure obtained indicate the selection of powerhouse at downstream of Keng Luang for the KT2 dam.