Country are trying to change the way they charge customers

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Reference no: EM131202236

Electric utilities across the country are trying to change the way they charge customers, shifting more of their fixed costs to monthly fees. Traditionally, charges for generating, transporting and maintaining the grid have been wrapped together into a monthly cost based on the amount of electricity consumers use each month. Some utilities also charge a basic service fee of $5 or so a month to cover the costs of reading meters and sending out bills. Now, many utility companies are seeking to increase their monthly fees by double-digit percentages, raising them to $25 or more a month regardless of the amount of power consumers use. The utilities argue that the fees should cover a bigger proportion of the fixed costs of the electric grid, including maintenance and repairs. What is degree of operating leverage (DOL)? How is it calculated? Relative to other industries, what do you think the DOL is for the power industry - high or low? How does that affect the pricing, analysis, and planning the companies do?Distributing, Inc. must address the firm's profitability. Presently the company has 20% excess capacity. (All fixed costs are allocated costs.) Short essay.

Reference no: EM131202236

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Country are trying to change the way they charge customers : Electric utilities across the country are trying to change the way they charge customers, shifting more of their fixed costs to monthly fees. Traditionally, charges for generating, transporting and maintaining the grid have been wrapped together into..

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