Question

ack is trying to determine how he can save money by cutting his electricity bill. He is currently on a standard use plan for electricity and pays 7.5 cents per kWh. He keeps track of when he uses electricity and is thinking about switching to an interval use plan for electricity which costs 3 cents per kWh for off-peak use and 15 cents per kWh for on-peak use. Off-peak hours are from 8PM - 8AM and on-peak hours are from 8AM - 8PM. Below is the chart of his electricity usage:

Jack’s Electricity Usage Per Month
1200 kWh between 8PM and 8AM
400 kWh between 8AM and 8PM

Explain and justify which plan would best suit his needs.
a.
Jack should not switch to the interval use plan, which would cost $24 more per month.
b.
Jack should switch to the interval use plan, which would save him $24 per month.
c.
Jack should switch to the interval use plan, which would save him $96 per month.
d.
Jack should not switch to the interval use plan, which would cost $96 more per month.

Answer 1

Compute both monthly costs.

Standard plan: 1600 kWh × $0.075 = $120.00

Interval plan:
- Off‑peak: 1200 kWh × $0.03 = $36.00
- On‑peak: 400 kWh × $0.15 = $60.00
Total = $36 + $60 = $96.00

Difference: $120 − $96 = $24 savings.

Answer: b. Jack should switch to the interval use plan, which would save him $24 per month.