i = Year. i is a specified year either before year 0 or after year 0. Year 0 is the year before the unit becomes operational. For example, in the third year before the unit becomes operational, i would equal -2, and in the third year following commencement of operations of the unit, i would equal + 3. Years are represented by 52 week periods prior to or following the date on which the unit becomes operational. Outlays before the unit becomes operational are future valued to the year before the unit becomes operational (year 0), and outlays after the unit becomes operational are present valued to the year before the unit becomes operational. Year 0 must be the same for the units being compared.
g = The number of years prior to the year before the unit becomes operational (year 0) that (1) a cash outlay is first made for capital investments, or (2) an investment tax credit is first used-whichever occurs first.
N = The useful life of the unit (see paragraph (d)(5) of this section).
Ii = Yearly cash outlay (in dollars) from the year outlays first occur to the last year of the unit's useful life for capital investments. (See paragraph (d)(2) of this section for the items that must be included.)
OMi = Annual cash outlay in year i (in dollars) for all operations and maintenance expenses except fuel (i.e., all non-capital and non-fuel cash outlays caused by putting the capital investments (I) into service). This may include labor, materials, insurance, taxes (except income taxes), etc. (See paragraph (d)(3) of this section.)
Si = Salvage value of capital investment (in dollars) in year i.
FLi = Annual cash outlay for delivered fuel expenses (in dollars) in year i. (See paragraph (d)(3) of this section for FLi calculation instructions and appendix II of these regulations for the procedures to determine fuel price.)
k = The discount rate expressed as a fraction (see paragraph (d)(4) of this section).
ITCi = Federal investment tax credit used in year i resulting from capital investments (see paragraph (d)(6) of this section).
DPRi = Depreciation in year i resulting from capital investments (see paragraph (d)(6) of this section).
ti = Marginal income tax rate in year i (see paragraph (d)(6) of this section).
IXi = Inflation index value for year i (see appendix II to part 504 for method of computation).
IXe = Inflation index value for the year e, the year before the asset is placed in service.
The petitioner must demonstrate that the cost of using an alternate fuel substantially exceeds the cost of using imported petroleum for the first year of operation, the first two years of operation, and so forth, through the period of the proposed exemption. OFE will limit the duration of a temporary exemption to the shortest time possible.
Capital investment (I) is calculated with Equation 3 (paragraph (b)(3) of this section).
Note: The guidelines for the fuel inventory for powerplants not using natural gas shall be: (a) All powerplants with only steam driven turbines-78 days, (b) all powerplants with only combustion turbines-142 days, (c) all powerplants with combined cycles-both steam driven turbines and combustion turbines-142 days. The guidelines for the fuel inventory for installations not using natural gas shall be the greater of: (1) 21 days fuel supply, or (2) sufficient fuel to fill sixty (60) percent of the storage volume. The guidelines for the fuel inventory for all facilities using natural gas shall be zero unless the gas supply is interruptible in which case an appropriate inventory of back-up fuel must be included. Other inventory levels may be used if they are more appropriate than these guidelines; however, the source or derivation of these levels must be discussed in the evidential summary.
where:
R = The useful life of the facility with the longer life.
Q = The useful life of the facility with the shorter life.
k = The discount rate (see paragraph (d)(4) above).
10 C.F.R. §503.6