However, there are wide differences in the unit over-all costs of individual plants among the steam as well as the hydro stations, depending upon various circumstances, such as size of plant, plant factor, investment per kilowatt of installed capacity, cost of fuel, depreciation rate assumed, and estimated taxes.

The steam plant having the lowest cost shows an over-all unit cost of 3.3 mills per kilowatt-hour. This, it may be noted, is considerably lower than the most expensive hydro plant, which shows an over-all cost of 4.6 mills per kilowatt-hour. The cheap steam plant, however, enjoys the advantage of a relatively high plant factor and a relatively low investment per kilowatt of installed capacity. Taxes estimated on this plant are also low. On the other hand, the hydroelectric plant in question operated at a relatively low plant factor and in consequence unit operating expenses as well as unit total production expenses, including estimated depreciation and taxes, are considerably higher than the averages.

In view of considerations, such as the above, it is impossible to determine accurately an over-all average figure which could be applied to any individual situation. Costs at the steam stations included in the compilation vary from 3.3 to 8.8 mills per kilowatt-hour, a difference of 165 percent, and hydro costs vary from 1.7 to 4.6 mills, a difference of 170 percent. In all cases, however, total unit costs are less than 1 cent per kilowatt-hour and over-all average costs for hydro and steam plants combined are 5.4 mills, or slightly more than one-half cent per kilowatt-hour.

COMPREHENSIVE SAMPLE OF ALL STATIONS

A more general approach to the subject is provided by the attached graphs. These graphs show average investment costs per kilowatt for various capacities as reported by utilities for both hydro and steam generating stations. Also shown are unit operating expenses for hydro plants based on installed capacity and unit operating expenses for steam plants based on plant factor.

The attached graphs may be used for estimating, on a general basis representative of a broad cross section of the industry, relative costs of hydro and steam generation for various size plants and various plant factors. The following tabulation presents such an estimate predicated upon the average plant sizes and plant factors for the steam and hydro plants shown on the appended tabulations.

1 $1.60 per kilowatt; 52.3 percent plant factor equals 4,580 kilowatt-hours; 0.35 mill per kilowatt-hour.

It will be observed from the above tabulations that the data taken from the graphs, which are representative of a broad section of the industry, are fairly consistent with those developed in the appended statements, which are based on a limited number of individual plants. The average investment per installed kilowatt of steam capacity shown on the statement is $97, while that from the graph is $98. For hydro the average on the statement is $157, while that on the graph is $168, or 7 percent higher. Average operating expenses per kilowatt-hour for steam plants is shown on the statement as 3.4 mills, while on the graph the figure is 3 mills. Average operating expenses for hydro plants contained in the statement are $2.14, and the average on the graph is $1.60 per kilowatt. It will be observed, however, that average operating expenses per kilowatt for hydro plants in the Northeast, where those shown on the statement are generally located, are indicated on the graph to be approximately $1.90.

Thus, taking the investment figures and operating-expense figures shown on the graphs and using them in conjunction with rates for depreciation and taxes based upon studies of the industry generally, average total production expenses, including return at 6 percent, as assumed in the statements, are arrived at for steam plants in the amount of approximately 5.5 mills per kilowatt-hour and hydro plants in the amount of approximately 3.4 mills per kilowatt-hour.

The above discussion has related to costs based upon sizes of plant and plant factors equal to the the averages shown on the appended statements; that is, costs have been computed for a steam plant of 170,000 kilowatts operating at a 42.3 percent plant factor and for a hydro plant of 40,000 kilowatts operating at a 52.3 percent plant factor.

The appended curves may also be used to compute comparative costs for plants of equal size operating at equal plant factors. The following tabulation shows such a computation for steam and hydro plants of 50,000 kilowatts operating at a 50 percent plant factor:

1$1.40 per kilowatt; 50 percent plant factor equals 4,380 kilowatt-hours; 0.32 mill per kilowatt-hour.

It will be observed that, under such conditions, with respect to size of plant and plant factor, average costs of the steam plant would be 5 mills; at the hydro plant 3.5 mills.

It should be observed that in all the foregoing computations of cost, a cost of money rate of 6 percent has been assumed. At the present time a large proportion

61550-42-pt. 1-21

of the hydro capacity being installed is being financed by public funds. Cost of money rates on public financing are, of course, considerably lower than 6 percent. If in the last preceding computation a rate of 3 percent had been assumed for cost of money, the over-all unit cost for the steam plant would have been reduced approximately 0.7 mills and the average cost would have been 4.3 mills per kilowatt-hour rather than 5 mills as shown. Similarly, the cost for hydro generation would have been reduced approximately 1.1 mills and the resultant average cost would have been 2.4 mills.

The various average costs developed on the different bases discussed above are recapitulated in the following summary:

Generation costs

[Mills per kilowatt-hour]

Steam Hydro

From attached statements showing costs at representative plants..
From attached graphs based on broad section of the utility industry showing
average costs under conditions as to size of plant and plant factor comparable to
(a) above.

(c) From attached graphs showing cost for equal size plants (50,000 kilowatts) and
plant factors (50 percent)
(d) Same as (c) above with cost of money adjusted to reflect return of 4 percent rather
than 6 percent..

In evaluating relative costs of power generated at hydro and fuel plants, there are many important factors to be considered in addition to those discussed above. For example, the amount of reserve capacity required and the characteristics of power available with respect to certainty of supply. It is generally considered that reserve requirements for maintenance schedules or in case of break-down are higher for fuel plants than for hydro plants. On the other hand, because of variability of stream flows, reserve capacity generally must be maintained in connection with hydro plants in order to supply deficiencies during periods of low water.

While more space than is available within the scope of this memorandum would be required for adequate presentation of all of the important aspects of the subject of relative production costs of steam-electric and hydroelectric generating stations, it is believed that the figures cited are fairly representative.