Why do the post-project electric bills escalate more than the given electric inflation rate?

When calculating post-project electric bills, you have to take into account the expected year over year degradation in PV system output. Meaning that in addition to the increase in electric rates, you'll also be purchasing more kWhs.

When utility bill escalation is combined with a year over year system degradation, the result is a geometric increase or decrease in the year over year after solar utility bill, depending on the relative magnitude of the bill escalation and system degradation.

If you set system degradation to 0%, then subsequent year's electric bills will only go up the by the given electric bill escalation percentage. Note that for cases where the annual post-project electric bill is small, the effect of the system degradation can be pretty drastic; a small decrease in kWh’s produced results in a relatively large percentage increase in the post-project utility bill.