establishing the annual cost (excluding DDT&E) of operating each 5-Gigawatt satellite; and (2) determining the unit charge for energy (mills/kWh) required at each point in the projected production run to recover fully the estimated DDT&E costs. The ECON methodology rests on the computation of present value and is summarized in Figures A. 3, A. 5, A. 6, and A. 7 of the ECON report. In this extension of the analysis, the ECON equations were used first to establish the annual operating cost before DDT&E with alternative discount rates per Figure A.3. The second step was to generate a schedule of unit charges such that the present value of the excess of annual revenue over annual costs before DDT&E was equal to the present value of alternative estimates of DDT&E, as shown in Figures A.5 and A.6. Exhibit 26 summarizes the results of this analysis and corresponds to a partial numeric presentation of the DDT&E recovery graph in ECON Figure A.7. For each discount rate, the exhibit shows, at the top, the annual charge (in $millions and mills/kWh) required to cover all costs excluding DDT&E. The balance of the table is divided into two parts. The upper part shows, at five year intervals, the unit costs required to recover the total estimated DDT&E of $44.15 billion while the lower part presents a parallel analysis for the lower estimated DDT&E budget of $20.61 billion that would result if the $23.54 billion in "support," e.g., launch vehicle and related costs, were excluded. Changing the discount rate can cause the unit energy cost to vary substantially, even without considering DDT&E recovery. Base operating costs before DDT&E range from 21.4 mills/kWh using a 5% discount rate to 45.3 mills/kWh with a 15% rate. The impact of changes in the discount rate is even more marked when DDT&E recovery is considered. For example, in the year 2010 when 49 plants are operational and the full $44.15 billion is to be recovered, the required unit charges range from 28.7 mills/kWh at 5%, to 37.8 at 7.5%, to 49.3 at 10% to 83.3 at 15%. Increasing the number of satellites in operation, thereby providing a larger base over which to spread DDT&E costs, reduces unit charges in all cases, but still leaves substantial differences associated with different discount rates. In 2020, when 89 5-Gigawatt
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