The values for cost of electricity in Table 9.2 are higher for natural gas plants than in previous years because the cost of gas is higher this year. According to Table 9.10 of the EIA Monthly Energy Review, the cost of NG to power plants was typically $3.30/kcf over the 2015-2020 period compared to $7.30 / kcf in 2022. Lets examine the cost of electricity (CoE) from NGCC power plants under the cheaper natural gas costs of the recent past which, if were optimistic, would be the cost of NG over most of the lifetime of a plant we would construct today.

a) Assuming the capital costs, O&M rates, and efficiencies for NGCC given in Table 9.1, what would the CoE be from a gas plant at an NG price of $3.30/kcf and a capacity factor of f=0.85? We can continue to assume a real interest rate of 5% per year and a 30-year lifetime.

b) Some power companies have the option of building a new NGCC plant vs continuing to operate an existing coal power plant. To estimate the cost of producing additional electricity from continued operation a plant that already exists, you only need to count the O&M and fuel costs, because youve already committed to capital costs (in the words of the economists, this is the marginal cost of making more kWh of electricity). At the lower NG cost used in (a), and using the other info about coal power plants in Table 9.1, which would the power company consider a cheaper way to provide base load (at f=0.85): running and building the NGCC plant from (a), or just the running cost of a coal plant they already have?

Table 9.1 Crude Oil Price Summary (Dollars ner Barrel) - see Note 1, Zruce Uil herinery Acquisition Costs," at ena or section. c See Note 2, "Crude Oil Domestic First Purchase Prices," at end of section. averages are the averages or me montniy prices, weigntea by volume. - Goographic coverage is the 50 states, the District of Columbia. Puerto Rico, the Q See Note 4 " "Crude Oil Landed Costs," at end of section. Virgin Islands, and all U.S. Territories and Possessions. Web Page: See hitp-/www.eia.govitotalenergyidataimonthly/tprices (Excel and CSV files) for all avallable annual data beginning in 1949 and monthly data Notes: - Domestic first purchase prices and refinery acquisition costs for the beginning in 1973 current two months are preliminary. F.O.B. and landed costs tor the current three months are preliminary. - Through 1980, F.O.B. and landed costs reflect the Table 9.1 Crude Oil Price Summary (Dollars ner Barrel) - see Note 1, Zruce Uil herinery Acquisition Costs," at ena or section. c See Note 2, "Crude Oil Domestic First Purchase Prices," at end of section. averages are the averages or me montniy prices, weigntea by volume. - Goographic coverage is the 50 states, the District of Columbia. Puerto Rico, the Q See Note 4 " "Crude Oil Landed Costs," at end of section. Virgin Islands, and all U.S. Territories and Possessions. Web Page: See hitp-/www.eia.govitotalenergyidataimonthly/tprices (Excel and CSV files) for all avallable annual data beginning in 1949 and monthly data Notes: - Domestic first purchase prices and refinery acquisition costs for the beginning in 1973 current two months are preliminary. F.O.B. and landed costs tor the current three months are preliminary. - Through 1980, F.O.B. and landed costs reflect the