Jim Jackson, a rate analyst for the Washington Water Power Company, while preparing for a rate case needed to forecast electric residential revenue for 1996. Jim decided to investigate three potential predictor variables: residential use in kilowatt-hours (kWh), residential charge per kWh (cents/kWh), and number of residential electric customers. He collected data from 1968 to 1995. The data are shown in Table P-11. Jim testified before the Idaho Rate Commission and was asked if serial correlation was a problem. He didn't know the answer and has asked you to write a response to the commission's question.

Transcribed Image Text:

TABLE P-11 Number of (cents/kWh) Customers Charge Revenue (S millions) Use per kWh Tear 139,881 142.806 146,616 151,640 157,205 162,328 166.558 170,317 175,536 181,553 188,325 194,237 198,847 201,465 203,444 205.533 208,574 210,811 1968 1969 1970 11,129 11.361 11,960 12,498 20.9 23.4 12,667 24.512.857 1974 1977 1978 488 1979 1980 643 1981 14.223 14.427 14,878 15,763 1.59 14,697 15,221 14,166 14,854 1983 146 14.997 1984 114.6 1985 129.7 1986 126.1 1987 132.0 1988 138.1 86.5 13,674 13,062 13.284 13,531 4.34 214,479 215,610 217,164 1990 143.7 223,364 227,575 233,795 239,733 253.364 1991 149.2 1992 1461 13.287 1993 153.9 1994146.9 1995 12,661 156.8 4.98