Entries by Hannah Wangui

Question Question 6 (5 points): Question Question 6 (5 points): Entergy purchased Vermont Yankee in 2002 for $180 million, which we will useas the capital cost or “principal” of the plant. The capacity of the plant is 600,000kilowatts (kW), or 600 megawatts (MW). Calculate the levelized cost of energyfor Vermont Yankee over its initial period of ownership by Entergy, from 2002through 2013. In your analysis, please treat 2002 as “Year 0” and 2003 as “Year1” (and so on). Assume also that Entergy uses an internal discount rate of 12% peryear. The variable cost of operating a nuclear power plant in the U.S. in 2002 wasapproximately $20 per MWh. You should assume continuous compounding inthis problem. Assume that Vermont Yankee produced 4,920,000 MWh per yearevery year from 2002 through 2013. Question 7 (8 points): Vermont Yankee was under contract to sell half of the plant’s output to Vermontutilities for $45 per MWh. The remainder of the plant’s output is sold to ISO-NewEngland (ISO-NE) at the market price for Vermont. This price has averaged $57per MWh since 2002. Thus, the annual revenues for Vermont Yankee are givenby the equation:Revenuet = (45 ×Qt/2) + (ISO-NE Price ×Qt/2) = $51/MWh ×QtWhere the subscript t indicates year t; thus Qt is total electricity production atVermont Yankee (in MWh) in year t.Calculate annual revenues for Vermont Yankee and the net present value of theplant over the period 2002 to 2013. Can you calculate the internal rate of returnVermont Yankee in 2002 for $180 million, which we will useas the capital cost or “principal” of the plant. The capacity of the plant is 600,000kilowatts (kW), or 600 megawatts (MW). Calculate the levelized cost of energyfor Vermont Yankee over its initial period of ownership by Entergy, from 2002through 2013. In your analysis, please treat 2002 as “Year 0” and 2003 as “Year1” (and so on). Assume also that Entergy uses an internal discount rate of 12% peryear. The variable cost of operating a nuclear power plant in the U.S. in 2002 wasapproximately $20 per MWh. You should assume continuous compounding inthis problem. Assume that Vermont Yankee produced 4,920,000 MWh per yearevery year from 2002 through 2013. Question 7 (8 points): Vermont Yankee was under contract to sell half of the plant’s output to Vermontutilities for $45 per MWh. The remainder of the plant’s output is sold to ISO-NewEngland (ISO-NE) at the market price for Vermont. This price has averaged $57per MWh since 2002. Thus, the annual revenues for Vermont Yankee are givenby the equation:Revenuet = (45 ×Qt/2) + (ISO-NE Price ×Qt/2) = $51/MWh ×QtWhere the subscript t indicates year t; thus Qt is total electricity production atVermont Yankee (in MWh) in year t.Calculate annual revenues for Vermont Yankee and the net present value of theplant over the period 2002 to 2013. Can you calculate the internal rate of return

August 22, 2019 in /by

Question Question 6 (5 points): Entergy purchased Vermont Yankee in 2002 for $180 million, which we will useas the capital cost or “principal” of the plant. The capacity of the plant is 600,000kilowatts (kW), or 600 megawatts (MW). Calculate the levelized cost of energyfor Vermont Yankee over its initial period of ownership by Entergy, from […]

 

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Question Question Consider a perfectly competitive market for natural gas. Price taking natural gas consumers (electricity plants, industrial producers, and residential users) have an iso-elastic demand function given by: P=100(Q^(1/Nd)) where Nd0 is the elasticity of natural gas supply. Suppose the government is considering an ad valorem tax on producers of 10% of the sale price. a. For Nd between -5 and -1.1 (increments of 0.1) and Ns=2: i. calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium. ii. Calculate the change in deadweight loss due to the tax. b.For Ns between 1.1 and 5 (increments of 0.1) and ND=-2 i. Calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium. ii. Calculate the change in deadweight loss due to the tax. c. Suppose that Nd=-1.5 and Ns=2. The government when setting the tax argued that producers would not bear the brunt of the tax incidence. i. Was the government correct in making this assessment? ii. What were the implications of the government’s choice for the efficiency costs of the tax? I need help with the above problem. Thanks!. Price taking natural gas consumers (electricity plants, industrial producers, and residential users) have an iso-elastic demand function given by: P=100(Q^(1/Nd)) where Nd0 is the elasticity of natural gas supply. Suppose the government is considering an ad valorem tax on producers of 10% of the sale price. a. For Nd between -5 and -1.1 (increments of 0.1) and Ns=2: i. calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium. ii. Calculate the change in deadweight loss due to the tax. b.For Ns between 1.1 and 5 (increments of 0.1) and ND=-2 i. Calculate the change in consumer and producer surpluses due to the tax relative to the no-tax competitive equilibrium. ii. Calculate the change in deadweight loss due to the tax. c. Suppose that Nd=-1.5 and Ns=2. The government when setting the tax argued that producers would not bear the brunt of the tax incidence. i. Was the government correct in making this assessment? ii. What were the implications of the government’s choice for the efficiency costs of the tax? I need help with the above problem. Thanks!

August 22, 2019 in /by

Question Consider a perfectly competitive market for natural gas. Price taking natural gas consumers (electricity plants, industrial producers, and residential users) have an iso-elastic demand function given by: P=100(Q^(1/Nd)) where Nd<0 is the elasticity of natural gas demand. Price taking natural gas suppliers have an iso-elastic supply function given by  P=5(Q^(1/Ns)) where Ns>0 is the […]

 

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Question Question I’m in an energy economics course and need help with a homework question. The question reads: In a perfectly competitive market for coal, consumers’ benefit function from consuming tons of coal Q, is given by: B(Q)=-0.25(Q^2)+ 240Q In addition, the coal producer has a function given by: C(Q)=0.1(Q^2)+2Q. Suppose the government imposes an ad valorem tax on coal producers of 7% of the sale price. a. What is the competititive equilibrium in the absence of the tax? b. What is the competitive equilibrium with the ad valorem tax? c. What is the change in consumer surplus as a result of the tax? d. What is the change in producer surplus as a result of tax? e. How much revenue is generated by the tax? f. What is the deadweight loss from the tax? g. What is the change in total welfare due to the tax? If someone could help me get started on this problem, that would be great. Thanks!question. The question reads: In a perfectly competitive market for coal, consumers’ benefit function from consuming tons of coal Q, is given by: B(Q)=-0.25(Q^2)+ 240Q In addition, the coal producer has a function given by: C(Q)=0.1(Q^2)+2Q. Suppose the government imposes an ad valorem tax on coal producers of 7% of the sale price. a. What is the competititive equilibrium in the absence of the tax? b. What is the competitive equilibrium with the ad valorem tax? c. What is the change in consumer surplus as a result of the tax? d. What is the change in producer surplus as a result of tax? e. How much revenue is generated by the tax? f. What is the deadweight loss from the tax? g. What is the change in total welfare due to the tax? If someone could help me get started on this problem, that would be great. Thanks!

August 22, 2019 in /by

Question I’m in an energy economics course and need help with a homework question. The question reads:In a perfectly competitive market for coal, consumers’ benefit function from consuming tons of coal Q, is given by: B(Q)=-0.25(Q^2)+ 240Q In addition, the coal producer has a function given by: C(Q)=0.1(Q^2)+2Q. Suppose the government imposes an ad valorem tax […]

 

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