Hello all, heree are a couple of thoughts I have regarding the costing exercise
* In order to construct a rate, we also need to develop the denominator for the equation, or the
anticipated production expected from the representative unit.
* Also, Ken, I seem to remember from my dealings with taxes in the past that the tax basis for a
generation asset is based on its anticipated market value over its lifetime, absent any special contractual
arrangements which the owner may have. So for units like this, the tax value would be based on the
market value of the electricity produced, and not the contractual value. Am I off base?
* Another factor to estimate would be an end of contract value, or salvage value - which may require a
discount rate to incorporate into rates.
* Some FiTs I have looked at incorporate a technology improvement factor which serves to adjust rates
in anticipation of improvements in technology.
* Other costs to include are permitting and interconnection study costs. (perhaps this is what you mean
by development costs)
* Under operating costs, there may be operating benefits which may accrue to owners of these
systems. The one that comes to mind are the operating benefits of a manure methane system, but there
may be others - emergency back up, savings from gas flaring at landfills, benefius from hydro
(recreational??)
* How does the addition of a renewable system effect the resale value of a property?
* It seems to me that there is a relationship between the contract length and assumed return of and on
the capital asssumed in the rates, as well as the term of any debt used to finance the project. This needs
to be examined.
Dave Lamont