| The purpose of this article is to evaluate and compare the incremental cost of purchased power from non-utility generators versus utility built generation considering a variety of contracts for energy purchases. Four types of contracts are evaluated: I) Flat Rate Produce and Pay, 2) On-Peak/Off-Peak, 3) Basic Dispatchable, and 4) Actual Cycle Energy Dispatch. The type of contract can affect the competitiveness of electric rates through increased energy production costs as well as increased risks, in terms of financial liability, affecting the cost of debt to the purchasing utility. An analysis conducted for a representative utility calculates the effects of NUG power purchases on a utility's energy production costs and the cost of new debt issuances.... |
