Probability Problem An electric utility is experiencing a difficult time obtaini
ID: 3242673 • Letter: P
Question
Probability Problem
An electric utility is experiencing a difficult time obtaining natural gas for electric generation. Fuels other than natural gas (called fuel-mixes) are purchased at an extra cost, which is transferred to the customer. Total monthly fuel expenses are now averaging $7,750,000.
An engineer with the city-owned utility has calculated the average revenue for the past 24 months using three fuel-mix situations –
Gas Plentiful
< 30% other fuels purchased
>=30% other fuels purchased
The table below indicates the number of months that each fuel-mix situation occurred (i.e Gas Plentiful occurred 12 out of the last 24 months).
Can the utility expect to meet future monthly expenses based on the 24 months of data, if a similar fuel-mix pattern continues? (i.e. what is the expected EMV?) You can use Excel (show formulas) or do this by hand
Revenue & Fuel Mix Data
Fuel-Mix Situation
Months in Past 24
Average Revenue,
$ per Month
Gas plentiful
12
5,270,000
<30% other
6
7,850,000
>= 30% other
6
12,130,000
Revenue & Fuel Mix Data
Fuel-Mix Situation
Months in Past 24
Average Revenue,
$ per Month
Gas plentiful
12
5,270,000
<30% other
6
7,850,000
>= 30% other
6
12,130,000