Table F-4: Immediate Rehabilitation Life-cycle Costs (Standard Errors in Parenthesis)
Unit 1
Unit 2
Reliability Cost
Turbine
Turbine
Expected Present value
of Life-cycle Repair
77,300
82,100
77,300
82,100
Costs
(3,700)
(2,600)
(3,700)
(2.600)
Expected Present value
of Life-cycle
1,450,800
Opportunity Costs
(30,400)
Expected Present value
of Life-cycle O&M
179,000
Costs
(450)
Total Life-cycle Costs
1,948,600
(31,069)
Values in dollars.
F-4. Major Rehabilitation Strategy.
a. For the purposes of this example, only one rehabilitation strategy is considered,
immediate rehabilitation of the turbines and generators in both units. In addition, construction
activities are initiated immediately to rehabilitate Unit 1. After 2 years, Unit 1 construction and
testing will be complete and Unit 2 will be rehabilitated. Both units will be available for service at
the end of the fourth year. Table F-1 lists the revisions in risks and costs due to the
rehabilitation. During the construction, only one unit is in operation so that the opportunity costs
shown in Table F-2 are incurred. Additionally, no regular O&M expenditures take place for a unit
that is out of service whether under repair or during rehabilitation construction. Table F-4 shows
the reliability costs with this rehabilitation strategy. Note that the opportunity costs with
rehabilitation, due to lost energy and capacity, exceed those that would have occurred without
rehabilitation. This stems from the fact that during the rehabilitation construction (4 years), one
of the units is out with certainty. Therefore, there is this certain loss plus the increased risk that
both units will be out during the construction. After rehabilitation the risk of an outage is greatly
reduced but the contribution to reducing the life-cycle present value is also less important due to
discounting.
b. From the results from Tables F-3 and F-4, the expected present value of benefits from
the proposed rehabilitation strategy are the difference in life-cycle costs. The summary statistics
F-6
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