The equivalent first cost method (described in the REA (Rural Electric Administration) Bulletin 61-16) for calculating loss evaluation values is examined. Procedures for calculating the fixed charge rate and the distribution cooperative's system capacity charge using REA Form 7 are presented. A sample problem is included and is used to show that it is possible to calculate the loss evaluation values so that distribution transformers can be purchased taking the cost of their losses into consideration. It is concluded that using the loss evaluation values for distribution transformer purchases will significantly reduce that portion of the cooperative's system losses due to distribution transformers.
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