Production categories would be available for a specific standard offer rate.

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Production categories
The legislation included the following production types with the intent that each production type
would be available for a specific standard offer rate.
Farm methane (12 cents)
Landfill methane (12 cents)
Wind less than 15 kw (20 cents)
Wind greater than 15 kw (average residential rate) (12.28 cents or 14.55 cents)
Northern Power wants to expand this category to three levels (15-100, 100-500, 500-2.3Mw)
Solar (30 cents)
Hydro (average residential rate) (12.28 cents or 14.55 cents)
Biomass (average residential rate) (12.28 cents or 14.55 cents)
Any other expansion?
For the items on the list, pick a particular, representative size to develop a set of costs.
For the July 30 meeting, can we agree on a representative size or assign an individual or subgroup to identify a
representative size?
How important is it to represent a range for the representative project(s) or should we focus on a single set of costs?
Production Factors
Assign capacity for each determination of sample project?
Determine capacity factor for each sample project
Capital costs
For each of the representative projects, we will need the following categories of capital costs. In
some cases, it may be appropriate to assign zero values to the cost components.
Real property: land and buildings - capital costs subject to property tax.
As Dave correctly pointed out, the valuation of most electric generating facilities is based on the
revenue minus costs for that facility.
Equipment costs are subject to property tax only in municipalities that include personal
property for the municipal property tax. Personal property (equipment) will not be subject to
the state education property tax.
Interconnection equipment may or may not be included in the cost analysis.
Do we consider interconnection equipment in the cost analysis?
Other issues to consider or exclude
Accelerated depreciation - Yes or No?
Income tax implications – Yes or No?
Development costs
How do we consider development costs for the different production categories?
Examples of development costs may include:
Permitting
Interconnection studies
Site preparation (including access roads?)
Operating costs
Maintenance cost
Property tax (built off of the capital cost estimates, above)
Fuel costs - (for biomass only)
Insurance
ISO charges
FERC charges (hydro only)
Wheeling charges – Do we include these in the cost model?
Do we need a price inflator for operating costs? If so, what value?
Fuel price inflator different from general price inflator?
Are there other operating costs to consider?
Do the technology improvement factors decrease the operating costs over time?
Cost of capital
Do we assume similar capital structure for each production category?
Do we assume the same cost of capital for each production category?
Production Factors
Assign capacity for each determination of sample project?
Determine capacity factor for each sample project
Discount rate
Is a discount rate necessary? If so, what is the appropriate discount rate for the analysis?
Contract length – Duration of the standard offer
20 year maximum except 25 year maximum for solar (Agreed?)
Note relationship between contract length and financing costs
Salvage value
Do we include a salvage value at the end of the contract?
Tax credits
The federal and state tax credits are based on the capital costs described above.
Federal Investment Tax Credit
Vermont Business Solar Tax Credit
Federal Production Tax Credit (based on production not costs)
How do we consider the observation that not all projects may be eligible for the tax credits (limited tax liability, not
defined as “business” installations)?
Grants
A start to the list of grants
Clean Energy Development Fund grants
Small Scale Renewable Energy Incentive Program grants.
What other grants should be included?
CEDF – Solar = approx. 25% of the project cost (DPS refine this figure)
CEDF – small solar (Small Scale Renewable Energy) = approx 20% of the project cost
CEDF – Wind
CEDF – small wind (Small Scale Renewable Energy)
CEDF – Landfill methane
CEDF – Farm methane
CEDF – Hydro
CEDF – small hydro (Small Scale Renewable Energy)
CEDF – Biomass
Plugging this all into the financial model
Is there additional information necessary?
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