CINESA, a government-owned power company that normally uses natural gas for electricity generation, is purchasing fuels other than natural gas and power from a commercially built wind farm, often at extra costs, which are transferred to the customer. Total monthly fuel and wind-power costs are now averaging $6,800,000. An engineer with the utility has calculated the average revenue for the past 24 months using three fuel-mix and wind-power situations: all gas, < 30% other or wind, and ≥ 30% other or wind. The table below shows the number of months for each situation and the associated revenue. If the same situation persists for the next 2 years, determine whether the utility’s revenue will be greater or less than the costs and by how much. Fuel/Wind Situation Months in Past 24 Average Revenue, $/Month All gas 12 $5,270,000 < 30% other/wind 9 $7,850,000 ≥ 30% other/wind 3 $12,130,000
CINESA, a government-owned power company
that normally uses natural gas for electricity
generation, is purchasing fuels other than natural
gas and power from a commercially built
wind farm, often at extra costs, which are transferred
to the customer. Total monthly fuel and
wind-power costs are now averaging $6,800,000.
An engineer with the utility has calculated the
average revenue for the past 24 months using
three fuel-mix and wind-power situations: all
gas, < 30% other or wind, and ≥ 30% other or
wind. The table below shows the number of
months for each situation and the associated revenue.
If the same situation persists for the next 2
years, determine whether the utility’s revenue
will be greater or less than the costs and by how
much.
Fuel/Wind Situation Months in Past 24
Average Revenue,
$/Month
All gas 12 $5,270,000
< 30% other/wind 9 $7,850,000
≥ 30% other/wind 3 $12,130,000
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