The Tri-County Generation and Transmission Association is a nonprofit cooperative organization that provides electrical service to rural customers. Based on a faulty long-range demand forecast, Tri-Country overbuilt its generation and distribution system. Tri-County now has much more capacity than it needs to serve Its customers. Fixed costs, mostly debt service on investment in plant and equipment, are $82.5 million per year. Variable costs, mostly fossil fuel costs, are $25 per megawatt-hour (MWh, or million watts of power used for one hour). The new person in charge of demand forecasting prepared a short-range forecast for use in next year. Budgeting process. That forecast calls for Tri-Country customers to consume 1 million MWh of energy next year.

a. How much will Tri-Country need to charge its customers per MWh to break even next year?

b. The Tri -Country customers balk at that price and con serve electrical energy. Only 95 percent of forecasted demand materializes. What is the resulting surplus or loss for this nonprofit organization?