• If the capital cost of the SPS is $12.2 billion, the inclusion of the SPS related costs in the utility rate structure would require an increase in the total cost of electrical energy to the consumer. • Utilities which use a semi-automatic fuel adjustment rate to recoup the cost of fuel will have to request a sizable increase in their base rates to cover their increased plant equity when the SPS comes on-line. Fuel rate reductions can occur within a month; base rate increases can take as long as a year to obtain. The higher the capital cost of the SPS, the greater may be the financial stress caused by regulatory delays. 2. "Leasing" of the SPS Output by the Utilities • The cost of purchasing energy could be recouped by many utilities via fuel adjustment rates. • At present, the reduction of the utility capital requirements caused by "leasing" energy from the SPS would have a beneficial effect on the utilities' financial ratings. It is not clear that this situation will prevail over the next fifty years, nor is it clear if the utilities would accept this arrangement over such a long term. • Since the utilities make no profit on purchased energy, the effect of the SPS on the total cost of electrical energy would be the same for both the utility ownership and the private ownership/utility leasing plans (assuming that the discount rate is the same for both the utility and the private corporation).
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