What should be considered as the cost of the energy

Reference no: EM13232662

A small machine shop, with 30 hp of connected load, purchases electricity at the following monthly rates per hp of connected load.

First 50 kilowatt-hours(kWh) at $0.12 per kWh

Next 50 kWh at $0.106 per kWh

Next 150 kWh at $0.06 per kWh

Over 250kWh at $0.057 per kWh

The shop uses 2800 kWh per month.

a) Calculate the monthly bill for this shop. Also, what are the marginal and average costs per kilowatt-hour?

b) Suppose Jennifer, the proprietor of the shop, has the chance to secure additional business that will require her to operate her existing equipment more hours per day. This will use an extra 1200 kWh per month. What is the lowest figure that she mihght reasonably consider to be the "cost" of this additional energy? What is this per kilowatt-hour?

c) Jennifer contemplates installing certain new machines that will reduce the labor time required on certain operations. These will increase the connected load by 10hp, but since they will operate only on certain special jobs, will add only 100 kWh per month. In a study to determine the economy of installing these new machines, what should be considered as the "cost" of this energy? What is this per kilowatt-hour?

Reference no: EM13232662

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