The per unit change of a utility's fixed and operating costs with time under a variety of circumstances can be estimated by using the methodology described in Appendix B. This variation with time (with and without the SPS) is plotted in Figures 3.4 and 3.5 If no SPS were to be included in the power pool, the unit cost of electrical energy would be where n is the number of year after 1974. These costs are plotted as solid lines in Figures 3.4 and 3.5 for the indicated inflation rates. When an SPS comes on-line, there are cost increases associated with the capital and operating costs of the SPS and cost decreases associated with fuel savings and the fixed costs of unbuilt, alternative base load equipment. Alternative base load capacity would have been required in increments of P g beginning the year the SPS is installed (P r is the max max yearly peak power demand). As the total amount of deferred base load capacity reaches 5 GW, an extra 2 GWe of reserve capacity ($125/kW) would be added to the power pool. The resulting fixed and fuel costs are shown as dotted lines in Figures 3.4 and 3.5. The fuel savings would initially be based on the average system fuel costs, not the cost of the unbuilt base load generators. For 5 to 8 years after the SPS is built, base load units would be used to meet the intermediate load and this would tend to decrease the overall fuel costs for the power pool. The total per unit cost of energy plotted in Figures 3.4 and 3.5 indicate that the purchase of an SPS (capital cost = $7.6 billion in 1974) would, under a variety of circumstances, lead to only a very slight increase in total costs. If the capital cost of the SPS were significantly greater than the assumed value, clearly the increase would be much larger.
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