Segregation of Hydroelectric Power Costs

In an analysis of electric power costs there are two elements that make up the load; first, the power or kilowatts, and second, the energy or kilowatt hours. It is, of course, impossible to have one without the other and the relation between the two is expressed by the load factor. In the analysis, either the power is assumed to be constant and the energy will vary with the load factor or the energy is assumed to be constant and the power or kilowatts will vary with the load factor. In the analysis of hydroelectric power costs, the energy output of the generating station per year is fixed by the stream flow so that the kilowatts are assumed to vary inversely with the load factor. The units of cost, in the above analysis of hydroelectric power costs, are so arranged that if the system load factor changed from what it had been when the plant was designed, the annual cost would change to correspond to that of a plant designed and built for the new load factor. If the revenue from all the different loads supplied by the plant is based on the demand and energy costs as derived for the plant, the total revenue received will correspond to the annual expenses of the station as if designed for the plant load factor. Diversity losses, reserve capacity and customer costs must of course be considered in arriving at the annual costs and plant load.