Table 4.12 Fuel Cost Projections (1978 $/10$ Btu): Delivered Prices for Three Scenarios, 1980 to 2020 Annual revenue requirements for an investment will normally vary from year to year over the life of the investment, but as a means of developing a single overall cost metric, the varying annual revenue requirements are converted to an equivalent stream of constant (levelized) annual revenue requirements. Equivalency is established by equating the present worth of the varying annual revenue-requirements stream with the present worth of the constant annual revenue-requirements stream. The revenue requirements are made up of the capital (i.e., return on equity, interest on debt, and depreciation) and operating costs (i.e., income and property taxes, fuel, operation and maintenance, and insurance). Capital and operating costs usually proceed over the plant life as described in Fig. 4.14. The levelized annual revenue requirement (LARR) is arrived at by the following equation:
RkJQdWJsaXNoZXIy MTU5NjU0Mg==