in 1969 and the increased use of coal. Coal prices fluctuated around these mean increases and decreases, with the average fluctuation between 1950 and 1968 being 3.5% and that between 1968 and 1977 being 14%. The trend and fluctuation in coal prices in the future is uncertain. However, it is unlikely that the trend will be similar to either of the two shown in Fig. 4.21. More probable are some moderate real increases in coal prices (less than in the volatile period from 1968-1977) with fluctuation similar to that in the period from 1950 to 1968 (i.e., 3.5%). The range of average price increases for coal, as described in the supply/demand futures analysis, is shown in Fig. 4.22. The figure shows that the average real increases in coal price ranged from 2.4%/yr to 0.87%/yr for the constrained intermediate case and unconstrained high case, respectively. In approximately the same period of time (i.e., 1964-1977), electrical equipment prices declined 1.5%/yr, with a 1.7% fluctuation. Similarly, construction costs increased 1.9%/yr with 2.6% fluctuation, and transportation and utility labor rose 1.6%/yr with a 3.0% fluctuation. The price of coal in any particular year (Yt) can be related to that of another year (Yo) through a series of factors. This expression gives the price of coal in, say, the year 2000, but in reality, that figure is the levelized cost of coal. Thus the cost of coal for every year over the whole period of operation of the coal plant must be weighted by a discount factor so that the random variable is not just the price of coal in the year 2000 but the levelized cost of coal for the whole period. The equation for the levelized cost of coal, regarded as a random
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