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<DIV dir=ltr align=left><SPAN class=625455416-05052006><FONT face=Arial
color=#0000ff size=2>The escalation assumptions that come from the Energy
Information Administration are, as Renee stated, negative for many years, and
from our perspective very conservative. I think that people use the EIA
numbers because most engineers have a difficult time even estimating what the
price of energy will be 15 years from now, or 5 for that
matter.</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=625455416-05052006><FONT face=Arial
color=#0000ff size=2></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=625455416-05052006><FONT face=Arial
color=#0000ff size=2>We have done a little research to try and find escalation
factors that agree more closely with recent experience. For California
have been using 2% based on a look back at utility rates. The difficulty
is that EIA never projects discontinuities (they can't), but a lot of the
increases over the past 30 years have been in the form of spikes. For
example, next year the price of natural gas may drop, but it will drop from
historic highs which were not captured by any escalation assumptions in the
recent past.</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=625455416-05052006><FONT face=Arial
color=#0000ff size=2></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=625455416-05052006><FONT face=Arial
color=#0000ff size=2>I would be curious to know if any large corporate entities
have an energy cost assumption built into their corporate budgeting
process. I have to believe that energy intensive industries, certainly the
airlines, and probably others have economists or consultants dedicated to
assessing this issue/risk.</FONT></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=625455416-05052006><FONT face=Arial
color=#0000ff size=2></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=625455416-05052006><!-- Converted from text/plain format -->
<P><FONT size=2>_____________________________________<BR>Pat Bailey, PE<BR>Green
Building Studio, Inc.<BR>444 Tenth Street, Suite 300<BR>Santa Rosa, CA
95401<BR><BR>707-569-7373 x101 - voice<BR>707-569-7313 -
fax<BR></FONT></P></SPAN></DIV>
<DIV dir=ltr align=left><SPAN class=625455416-05052006><FONT face=Arial
color=#0000ff size=2></FONT></SPAN> </DIV>
<DIV dir=ltr align=left><SPAN class=625455416-05052006><FONT face=Arial
color=#0000ff size=2></FONT></SPAN> </DIV><BR>
<DIV class=OutlookMessageHeader lang=en-us dir=ltr align=left>
<HR tabIndex=-1>
<FONT face=Tahoma size=2><B>From:</B> BLDG-SIM@GARD.COM
[mailto:BLDG-SIM@GARD.COM] <B>On Behalf Of </B>Renee J. Azerbegi<BR><B>Sent:</B>
Thursday, May 04, 2006 7:29 PM<BR><B>To:</B>
BLDG-SIM@GARD.COM<BR><B>Subject:</B> [BLDG-SIM] life cycle costing assumptions
for non-federal projects<BR></FONT><BR></DIV>
<DIV></DIV>
<DIV class=Section1>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">I was using BLCC for life cycle
costing and the end life cycle cost results were less than if I took the
maintenance costs, energy costs, and first costs and added them together over
the 25 year study period I was examining! Then I noticed the NIST/DOE fuel
escalation factors which have negative values for many of the years. This I
believe contributed to this error. My first question is, doesn’t this seem odd
that the fuel escalation factors are negative at a time like
now?<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Also, as this was a non-federal
project, I used a default factor of 2% instead. But my other questions are, for
life cycle costing analysis, what are the most commonly used sources you might
have found for inflation rates, real or nominal discount rates, or fuel
escalation rates? I made some assumptions based on doing some web research but
is there an acceptable method of choice other than using defaults in BLCC which
are designed more for federal projects?<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Thanks in advance for your
feedback!<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN
style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Renée<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face="Times New Roman" size=3><SPAN
style="FONT-SIZE: 12pt"><o:p> </o:p></SPAN></FONT></P></DIV><PRE>
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