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ORDER NO. PSC -2018 -0085 -PAA -EQ <br />DOCKET NO. 20170226 -EQ <br />PAGE 35 <br />s't Ux111A rUvvr tc or t.tc,nt t.UtwrAtl x Urtgaml anect rvo. xtr..tun <br />APPENDIX 1 <br />TO RATE SCHEDULE QS -2 <br />CALCULATION OF VALUE OF DEFERRAL PAYMENTS <br />APPLICABILITY <br />Appendix T provides n detailed desorption of the methodology used by the Company to c is late the montdy values of defening or avoiding the <br />Comparty's Avoided Unit identified in Schedule QS 2_ When used in conjunction with the current FPSC-appmvod costparamctcm associated with the <br />Company's Avoided Unit contained in Appm&* It, a QS may determine the applicable %vine of deferral capacity paym cwt rate associated with the <br />timing and operation of its particular facility should the QS cater into a Shmdard Offal Contract with the Company. <br />CALCULATION OF VALUE OF DEFERRAL OPTION A <br />FPSC Rule 25-17.0332(5) specifies that avoided capacity costs, in dollars per kilowatt per month, associated with capacity sold to a utility by a QS <br />pursuant to the Company's Staudavd Offer Contruet shall be defined as the yea-Iry-ytw vnlae ofdeferrit of the (mnpany s! Avcrided UrdL The year -try - <br />year value of deferral shall be the differencein revenue regtdrenhehas associated widr deferring the (:ompxmy's Avoided Unit one year, and shall he <br />calculated as follows: <br />Where, for a one yea defetrul: <br />VAC„ = utility's monthly value ofmaided capacity and O & M, <br />in dollars per kilowatt per month, for each month of <br />year M <br />E = Present value of cartyiay3 charges for one dollar of <br />m4zsbnent over L years with caning charges <br />computed using average annual rate base and assumed <br />to be prod at the middle of a ch year mrd present valued <br />to the middle of the first year, <br />R (I+iP)J(I4T7 <br />11. = total direct and indirect oast, in mid -year dollars per <br />kilowatt including AFUDC but excluding CWIP, of the <br />Company's Avoided Unit with an in-service date of year <br />u, including all identifiable and quantifiable casts <br />relating to the construction of tie Company's Avoided <br />Unit which would have leen paid had the Unit kern <br />oomhucted; <br />O, = total fixed operation and maintenance expense for the <br />year n in midyear dollars per kilowatt per year, of the <br />Company's Avoided Unit <br />is = annual escalation rate associated with the plant est of <br />Ute Companyrs Avoided Unit(s), <br />i, = annual epcolation rale aasncinted with the operation and rnaintonance expense of the Company's <br />Avoided tJnit(sk <br />Ir annual discount rate, defined as the utility's incremental ailer-tax coat of gap ital: <br />.L = expected life of tae ComparrIc Avoided Units} and <br />n = year for wihich the CompwVr Avoided Unit(s) is (arc) deferred starting with its (their) original <br />anticipated in-service datc(s) and ending with the termination of the Company's Standard Offer <br />Contract <br />(Continued on Suet No. 10.309) <br />Issued by: S. F. Romig, Director, Rates and Tariffs <br />FlTectixv: May 22, 2007 <br />g- 3 f <br />