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Impact of pre-existing nets: 3-year vs. 4-year distribution spacing
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Rough inputs for residual nets
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Serviceable coverage years remaining at end of year 30.30
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Serviceable coverage years remaining at end of year 40.08
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Key assumptions: residual net retention and discard rate
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Proportion of residual nets that is retained at start of a new distribution50%
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Proportion of residual nets that is discarded at start of a new distribution50%
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What proportion of net durability studies already captures contributions from residual nets?0.5
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With AMF: distributions with 3-year spacing
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Added future coverage years from residual nets0.075
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Coverage years lost to discard0.15
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Net change in coverage years due to residual nets, 3-year spacing-0.075
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Counterfactual: distributions with 4-year spacing
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Added future coverage years from residual nets0.02
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Coverage years lost to discard0.04
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Net change in coverage due to residual nets, 4-year spacing-0.02
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Net change in coverage years due to residual nets relative to counterfactual-0.055
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Implied adjustment to equivalent coverage years in CEA
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Coverage years per distribution round, 3-year spacing2.27
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Coverage years after adjustment for pre-existing nets, current 3-year CEA2.20
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Percent adjustment factor (relative to coverage years in current 3-year CEA)97%
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Coverage years after adjustment for pre-existing nets, 4 to 3 year counterfactual 2.22
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Percent adjustment factor, 4 to 3 year counterfactual 98%
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Difference in adjustment factors, 4 to 3 year counterfactual vs. current 3-year CEA1%
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