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Title: CRS83579ENRpage33
Page from: info:fedora/mu:87654
Text: percent capital cost underestimation is elso explored (and discussed below)~+ indeed, it represents the greatest risk, in terms of creating utility expendi- tures that are not covered by the proposed legislation~-greater, in feet; than t s all of the other factors combined. Base Case (scenarib A-1) Here the 1-mill fee is collected on non-nuclear power generation, which _is assumed to gtow at 2 percent

Title: CRS83579ENRpage32
Page from: info:fedora/mu:87654
Text: 3|! I\I 34.

Title: CRS83579ENRpage34
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Title: CRS83579ENRpage28
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Title: CRS83579ENRpage30
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Title: CRS83579ENRpage39
Page from: info:fedora/mu:87654
Text: percenthigherthanprojected,Simulation t E~l+ operatingwiththeotherbasecaseassumptionsunchanged,indicatesthat the 1 mill fee would have to be essessed until 2OO13fot the otilities to be reimbursed 90 percent of their outleys end accrued interest. At the end:of

Title: CRS83579ENRpage41
Page from: info:fedora/mu:87654
Text: of providing full financing. Feur such alternatives, providingi efor larger revenues, are exanined below. They ere (1) allowing the fee,toi% remain in place until revenues are generated to pay for all outlays, (2) de? I i laying compliance beyond 1990 for stage one reductions, (3) indexing the fee to inflation, and (4) increasing the fee to 1.5 mills per'kwh; Removing Fee Deadline Removingthel995

Title: CRS83579ENRpage37
Page from: info:fedora/mu:87654
Text: . But with the higher% e¢3Pit&l_Oﬁtlays, the fund woulo have toaoperate until the yeat 2001 to pey off the larger amount of interests in the unfunded eccrued investment at the relatively high interest rate (or leave the utilities with an unreimbursed debt of neerly $10 billiong) ” loFaster (3% vs. 2%) Growth in Non-nuelear Generation (Scenario D—1) % If non~nuclear power generation grows at a faster rate than

Title: CRS83579ENRpage43
Page from: info:fedora/mu:87654
Text: cRs—2o TABLE 2. Sensitivity of Fund Adequacy to Utility Capital Cost i‘ i e y (S billion) i x fcenario e t Full Funding Residual Balance 5 Base SQenafi0;ce 1996i i i 1.85 lO% utility capital , "i s costs x% “i ’ %Base Scenaric; “ l2% utility capitalh V ‘ V , J ~ % i cost ' x i 1997 V ‘1.57 Base Scenario;% c s c14% utility capital i Cost 1999 y y 2;72 tRemoving the deadline does

Title: CRS83579ENRpage40
Page from: info:fedora/mu:87654
Text: H

Title: CRS83579ENRpage38
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Title: CRS83579ENRpage36
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Title: CRS83579ENRpage42
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Title: CRS83579ENRpage51
Page from: info:fedora/mu:87654
Text: and an 8 percent construction inflation rate (base case assumptions), the 1996 liability for principle alone would be shout $1.2 c billion for Ohio Power, and $880 million for Union Electric.» Accrued isinterest during construction wonld add to this. %The related additionals ; revenue requirement would be abont“3Q6 mills per kwh for Ohio Power andes 4.3 mills per kwh for Unicn Electric in 1996 (nominal

Title: CRS83579ENRpage45
Page from: info:fedora/mu:87654
Text: analysis.’ Z/1’ ”< %i TABLE 3ft ccompliance Dates Sensitivityi ic » (S billi0ns)%a l i i A 1995 Balance with i i 1995 Balance with li i Soenarioi i % i 1 1990 Compliance ? -’ l992rCompliancec Base Sceoario p c i%i- l% % l -0.69 c i X i+1.61 c i Base Sceanrio: i 12% utility capital GCSCA T A % c i-3.21 4 i ,l it+ r+O.3l; Base Scenario: cost- i~ 14% utility capitali to % e L i -6.21 L c *1;18ii _Z/ r

Title: CRS83579ENRpage49
Page from: info:fedora/mu:87654
Text: %CRS“23 TABLE 4. 1995 Balances for Icdexed Fee -I "‘ ($ billions)o h i 1995 Balance~- t 1995 Balacce*' A Scenario e c4.8 percent inflationa i. 6 percent inflationt b Base Scenario h L f'V‘17t77 i . c e< i ihs16-13 Base Scenario; 12z u::1i:y e capital cost % Y s 16.00 c i To -* 14.76% Base Scenario; A141 utilityi : e s o capital cost e T i 13.97 s %%ha13.22 A Inc:easing_Fee to 1.5

Title: CRS83579ENRpage47
Page from: info:fedora/mu:87654
Text: the rise in construction cost or some general indicator of inflation. For texample, if the 1—mill fee is indexed to the 8 percent construction cost esca— 1ator used in the base scenario, the improved 1995 fund balances are quite significant. As shown in table 4, by 1995, the fund has between $14 and $18 billion in extra funds to disperse for stage two reductions; This assumesn actual construction costs

Title: CRS83579ENRpage46
Page from: info:fedora/mu:87654

Title: CRS83579ENRpage44
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Title: CRS83579ENRpage48
Page from: info:fedora/mu:87654

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