An electric utility company is considering a re-engineering of a major hydroelectric facility. The project would yield greater capacity and lower cost per kilowatt-hour of power. As a result of the project, the price of power would be reduced. This is expected to increase the quantity of power demanded. The following data are available:
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Effect of Reduced Price of Power
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|
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Current Price($/kWh)
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0.07
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Current consumption(kWh/Year)
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9,000,000
|
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New Price($/kWh)
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0.05
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Expected consumption (kWh/year)
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12,250,000
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What is the annual benefit to consumers of power from this project?