| Inflation |
Economic Research Unit of the California Department of Finance, July 2009 CPI Forecast Report. Value listed is a statewide average for the CPI-U forecasted for FY 2009 - 2010. |
| Discount Rate |
California Debt and Investment Advisory Commission, July 2009 Debt Line publication. This value reflects the highest listed California State Public Works Board bond issuance interest rate, rounded up to the nearest half percent. |
| Reinvestment Rate |
User should not input any value. |
| Routine Annual O&M |
Since this value is added to Inflation, User should not input any value and leave the escalation rate at the rate of Inflation, unless there is strong evidence to the contrary. |
| Major Repair/ Replacements |
Since this value is added to Inflation, User should not input any value and leave the escalation rate at the rate of Inflation, unless there is strong evidence to the contrary. |
| Utility Electric Rate Escalation |
California Energy Commission, California State-Wide Weighted Average Retail Electricity Prices 1982 – 2008.
User should note that this information was used to determine a “Percentage Change on Previous Year” value for each year, starting with 1983. An average of these values was then calculated to establish the average annual escalation of utility retail electricity prices. The utilities included in the CEC data were PG&E, Southern California Edison, San Diego Gas and Electric, SMUD, LADWP, Glendale, Burbank, and Pasadena.
The calculated value for the average annual utility retail electricity price escalation, based on this information, is 2.29%. It is assumed that this value includes the affect of CPI on utility retail electricity prices. Therefore, the value that is reflected in the table above takes into account the Inflation value of 1.20%, resulting in a Utility Electric Rate Escalation of 1.09 %. This is not a forecast, and will be evaluated on an annual basis or as necessary. |
| Demand Rate Escalation |
Same as above for "Utility Electric Rate Escalation" |
| Natural Gas Price Escalation |
U.S. Department of Energy, Energy Information Administration, Natural Gas Navigator, Annual History of City Gate Prices in California, 1984 to 2008; and Forecast and Analyses, US Data Projections, Natural Gas Prices, Table 13, March 2009.
The history of city gate prices was compared to the natural gas price projections, and the data sets that tracked each other reasonably well is the annual average city gate prices and the Average Lower 48 Wellhead Price (nominal dollars).
Based on this information, the forecast in Table 13, Average Lower 48 Wellhead Price, was used to determine the estimated annual increase in the price of natural gas. Table 13 starts with the 2006 calendar year through 2030. This forecast results in a value of 2.8% per year annual average increase in price.
The user of the LCCA model is cautioned about using forecasts for price increases. The cost effectiveness of any energy measure should not rely upon prices increasing over time at a annual rate that is difficult to predict or based on past historical information. The volatility of natural gas prices warrant this caution. . |
| Photovoltaic Degradation Factor (Solar) |
This value reflects solar panel warranties from the manufacturers of solar panels. A survey of several of the larger solar panel manufacturers listed a warranty of 80% of the nameplate generation output at 25 years, which results in a annual degradation factor of 0.8%. |
