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ORDER NO. PSC -2018 -0316 -PAA -EQ <br />DOCKET NO. 20180083 -EQ <br />PAGE 36 <br />Attachment A <br />PL JMVA rV WbK i t LKitt l L:VMYAIy T vngmai bneet no. iu.sua <br />APPENDIX I <br />TO RATE SCHEDULE QS -2 <br />CALCULATION OF VALUE OF DEFERRAL PAYMENTS <br />APPLICABILITY_ <br />Appendix 1 provides a detailed description of the methodology used by the Company to calculate the monthly values of defttting or avoiding the <br />Company's Avoided Unit identified in Schedule QS -2. When used in conjuration with the current FPSC-approved oast panund rs associated with the <br />Company's Avoided Unit contained in Appendix 11, a QS may determine the applicable value of deferral capacity payment rale associated with the <br />timing mrd operation of ifs particular facility should the QS enterinto a Standard Offer Contract with the Company. <br />CALCULATION OF VALUE OF DEFERRAL OPTION A <br />FPSC We 25-17.0832(5) specifics that avoided capacity costs, in dollars per kilowatt per mondi, associated with capacity sold to a utility by a QS <br />pursuant to the Company's Standard Offer Contract shall be defined as the year -by -year value of deferral of dic Company's Avoided Unit The year -by - <br />year value of deferral shall be the diffaimoe in revenue requirements associated with defetring the Company's Avoided Unit one year, and shall be <br />calculated as follows: <br />Where, for a one year defertal: <br />VAC. - <br />tra ys monthly value ofavoidcd capacity and O & he, <br />in dollars per kilowatt per mottle, foreach month of <br />year n; <br />K = <br />present value of carrying charges for one dollar of <br />investment over L years with carrying charges <br />computed using average annual rate base and assumed <br />to be paid at Ute middle of each year and present valued <br />to the middle of the fust year, <br />R = <br />(I+ip)/(1+5); <br />1, = <br />total direct ad indircq cost, in mid -year dollars per <br />kilowatt including AFUDC but excluding CWIP, of the <br />Companys Avoided Unit with an krservice date of year <br />n, including all identifiable and quantifiable casts <br />relating to the coiutmetion of the Company's Avoided <br />Unit which would lave been paid had the Unit been <br />constructed: <br />O <br />total fixed operation and maintenance expense for the <br />year ri, in midrycar dollars per kilowatt per year, of the <br />Company's Avoided Unit; <br />b <br />around escalation rax associated with the plant cost of <br />the Company's Avoided Unk(s); <br />is = <br />snnmel escalation rate associated with the operation and maintenance expose of the Company's <br />Avoided Urigs); <br />r <br />annual discount rate, defuxd as the utility's incrernentat atter-tax cost of capital; <br />L o <br />expected life of the Companys Avoided Unit(s); and <br />a n <br />year for which the Company's Avoided Units) is (are) deferred stating with its (Uie'nr) original <br />anticipated in-savice dates) and ending with the termination of the Companys Standard Offer <br />Contract <br />(Continued on Sheet No. 10.309) <br />Issued by: S. E. Romig, Director, Rates and Tariffs <br />Effective: May 22, 2007 <br />t-3� <br />