CINESA, a government-owned power company that normally uses natural gas for electricity generation, is purchasing fuels other

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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.

Average Revenue, Fuel/Wind Situation Months in Past 24 $/Month All gas < 30% other/wind > 30% other/wind 12 $5,270,000 $

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Engineering Economy

ISBN: 978-0073523439

8th edition

Authors: Leland T. Blank, Anthony Tarquin

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