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<br />003413 <br /> <br />The difference is largely inflation. <br />current expenses and therefore do not <br />discussion of the effect of inflation <br />is provided in Appendix a. <br /> <br />Unlike capital costs, energy costs are <br />get distorted by inflation. A further <br />on the calculation of rates from costs <br /> <br />Table 2.2 lists recently completed generation units and units that are about <br />to be completed by some of Colorado's major utilities. Calculated for each <br />plant are average costs for each kwh. The average total costs show the <br />effect of combining capacity costs with operating costs. For purposes of <br />comparison, we have assumed that all units shown have the same capacity <br />factor (7~), an assumption needed to spread fixed costs over the same <br />number of hours of operation. (How these costs are translated into utility <br />rates is the subject of Appendix a.) <br /> <br />The very low figure shown for Craig land 2 ia due to a very favorable coal <br />contract obtained by Colorado-Ute. The figure for the almost-complete Craig <br />3 unit. which is almost identical to units 1 and 2, reflect the fact that <br />the coal it will burn is more expensive. Coal for the Nixon unit has to be <br />transported a bit farther than coal for the other units, so the price is a <br />bit higher. <br /> <br />The. average cost of energy across the first five plants is 1.6t/kwh. A <br />figure of 1.7t/kwh seems more representative since the coal supply to Craig <br />1 and 2 is extraordinary. The average total cost per kwh for a power plant <br />is calculated by combining energy cost (cost of coal) with the cost of <br />capital (interest. amortization and depreciation) spread over the numbers of <br />kwh produced. This is done in the right-hand column of Table 2.1. The <br />average total cost per kwh for the existing coal-fired plants is 3.73 <br />cents. The difference between the average total column and the energy <br />column is the part of the total costs of energy that goes toward the cost of <br />capital tied up in the generation and transmission system. Thus, over 57 <br />percent (2.l3t/kwh) of the cost of electric energy is attributable to the <br />cost of capital tied up in the generation equipment. <br /> <br />9 <br />