This item requires the dataset Utilities.xls which can be found on the subject Interact site. This dataset gives corporate data on 22 US public utilities. We are interested in forming groups of similar utilities. The objects to be clustered are the utilities. There are 8 measurements on each utility described below. An example where clustering would be useful is a study to predict the cost impact of deregulation. To do the requisite analysis economists would need to build a detailed cost model of the various utilities. It would save a considerable amount of time and eort if we could cluster similar types of utilities and to build detailed cost models for just one typical utility in each cluster and then scaling up from these models to estimate results for all utilities. The objects to be clustered are the utilities and there are 8 measurements on each utility.

X1: Fixed-charge covering ratio (income/debt) X2: Rate of return on capital X3: Cost per KW capacity in place X4: Annual Load Factor X5: Peak KWH demand growth from 1974 to 1975 X6: Sales (KWH use per year) X7: Percent Nuclear X8: Total fuel costs (cents per KWH)

>> Conduct Principal Component Analysis (PCA) on the data. Evaluate and comment on the Results. Should the data be normalized? Discuss what characterizes the components you consider key and justify your answer.

utility_name	utility	x1	x2	x3	x4	x5	x6	x7	x8
Arizona	1	1.06	9.2	151	54.4	1.6	9077	0	0.628
Boston	2	0.89	10.3	202	57.9	2.2	5088	25.3	1.555
Central	3	1.43	15.4	113	53	3.4	9212	0	1.058
Common	4	1.02	11.2	168	56	0.3	6423	34.3	0.7
Consolid	5	1.49	8.8	192	51.2	1	3300	15.6	2.044
Florida	6	1.32	13.5	111	60	-2.2	11127	22.5	1.241
Hawaiian	7	1.22	12.2	175	67.6	2.2	7642	0	1.652
Idaho	8	1.1	9.2	245	57	3.3	13082	0	0.309
Kentucky	9	1.34	13	168	60.4	7.2	8406	0	0.862
Madison	10	1.12	12.4	197	53	2.7	6455	39.2	0.623
Nevada	11	0.75	7.5	173	51.5	6.5	17441	0	0.768
NewEngla	12	1.13	10.9	178	62	3.7	6154	0	1.897
Northern	13	1.15	12.7	199	53.7	6.4	7179	50.2	0.527
Oklahoma	14	1.09	12	96	49.8	1.4	9673	0	0.588
Pacific	15	0.96	7.6	164	62.2	-0.1	6468	0.9	1.4
Puget	16	1.16	9.9	252	56	9.2	15991	0	0.62
SanDiego	17	0.76	6.4	136	61.9	9	5714	8.3	1.92
Southern	18	1.05	12.6	150	56.7	2.7	10140	0	1.108
Texas	19	1.16	11.7	104	54	-2.1	13507	0	0.636
Wisconsi	20	1.2	11.8	148	59.9	3.5	7287	41.1	0.702
United	21	1.04	8.6	204	61	3.5	6650	0	2.116
Virginia	22	1.07	9.3	174	54.3	5.9	10093	26.6	1.306