3. Annual Recurring Costs Recurring costs also show some variation. One of the two recurring cost components described in equation (2) in Exhibit 22, "taxes, insurance, profit, etc.," is typically not independently estimated. Most references simply assume this cost element to be equal to 5 percent of capital cost. In the JPL references, this estimate may be further subject to inflation at a stated rate during the life of the system. Notwithstanding footnotes citing the 5 percent assumption, actual estimates given for "other costs" in projecting terrestrial generation costs considerably exceed this factor. There is, however, no reference of any type in the tables showing SPS unit costs; hence the ambiguous designation as "inflation and other unexplained variance" in Exhibit 23. Only two of the references explicitly designate "operating" or "maintenance" costs (ECON, Ref. All and JPL, Refs. A9, A15). In the MSFC cost report (A16), a distinction is made between operations and investment which is not altogether clear. The only component other than "taxes, insurance, etc.," in "operations" is labeled "transportation." Ignoring for the moment the "inflation and other unexplained variance" estimates and their possible relationship to operations and maintenance costs, it would appear that this cost center is both small in relation to the total and relatively stable as between references, varying from $22 to $40 per kilowatt per year. 4. Discount Rates and Capital Recovery Charges One major source of inconsistency between the various estimates is the different discount rate used to derive the annual capital charge. To eliminate this source of inconsistency and simultaneously show the impact that the discount rate can have on derived unit costs, a separate tabulation has been made in Exhibit 24 applying the discount rates of 7.5 percent (the most widely cited in the references) and 10.0 percent (the OMB standard) to all estimated capital costs. In each case, the two rates are applied to derive estimated annual capital charges and the mill/kWh rates are recalculated leaving all other annual costs the same as in Exhibit 23. The results show that a shift from 7.5 to 10.0 percent
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