San Diego Community Power (a CCA for SDG&E) offers a voluntary time of use pricing schedule...
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San Diego Community Power (a CCA for SDG&E) offers a voluntary "time of use" pricing schedule which charges $0.30/kWh during peak hours and $0.10/kWh in off-peak hours. Consumers who don't choose this plan are charged $0.25/kWh. By looking at consumers who went from the standard pricing to the time of use plan, they estimated that these households reduced their peak hour demand by 25%, but increased off-peak demand by 20%. (a) What is the price elasticity of peak hour demand from the starting point for the households that adopt this pricing plan? (2pts) (b) Remember that households opted in to this program. How is this elasticity estimate likely to compare to the elasticity for households that chose not to adopt the time of use program? (No explanation necessary) (1pt.) i. Non-adopters will be more elastic ii. Non-adopters will have the same elasticity iii. Non-adopters will be less elastic iv. Not enough information (c) Based on the above, how will total household electricity usage change as a result of adopting the time of use plan? (No explanation necessary) (1pt) i. Increase ii. No change iii. Decrease iv. Not enough information (d) Regardless of the effect on total demand, explain why the utility company would be happy about the results of offering this time of use plan. (2pts) San Diego Community Power (a CCA for SDG&E) offers a voluntary "time of use" pricing schedule which charges $0.30/kWh during peak hours and $0.10/kWh in off-peak hours. Consumers who don't choose this plan are charged $0.25/kWh. By looking at consumers who went from the standard pricing to the time of use plan, they estimated that these households reduced their peak hour demand by 25%, but increased off-peak demand by 20%. (a) What is the price elasticity of peak hour demand from the starting point for the households that adopt this pricing plan? (2pts) (b) Remember that households opted in to this program. How is this elasticity estimate likely to compare to the elasticity for households that chose not to adopt the time of use program? (No explanation necessary) (1pt.) i. Non-adopters will be more elastic ii. Non-adopters will have the same elasticity iii. Non-adopters will be less elastic iv. Not enough information (c) Based on the above, how will total household electricity usage change as a result of adopting the time of use plan? (No explanation necessary) (1pt) i. Increase ii. No change iii. Decrease iv. Not enough information (d) Regardless of the effect on total demand, explain why the utility company would be happy about the results of offering this time of use plan. (2pts)
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Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
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