Calculating the cost of producing energy for regulated and nonregulated industry
There are several motives for this report. The first is to help the reader understand how the cost of energy is affected by its many constituent elements. The correct calculation of energy cost is best accomplished by working only with observable elements such as current-dollar capital costs, tax rates, inflation indexes, and public utility regulations. Quantities that cannot be observed, such as constant-dollar costs, are either converted to observable quantities or not used in the calculations. The effects of taxation and regulation will be observable quantities as computed in current dollars. A second motive for this report is to develop a standard format for describing the cost of producing energy from a specific technology. The format developed here is not only based on observable quantities but it is flexible in that it can adapt to changes in cost elements and revisions of tax and regulatory provisions. The end result of this paper - the formulas for calculating the levelized cost of producing energy - provides a convenient and intuitive method for communicating information about technologies and the effects of inflation, taxation, regulation, and other variables on the cost of energy.
- Research Organization:
- Decision Focus, Inc., Los Altos, CA (USA)
- DOE Contract Number:
- AC05-79ET60004
- OSTI ID:
- 6976158
- Report Number(s):
- DOE/ET/60004-T3; ON: DE84011237
- Resource Relation:
- Other Information: Portions are illegible in microfiche products
- Country of Publication:
- United States
- Language:
- English
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