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Question: Electric utilities in California often make exchanges of power with utilities in the Pacific Northwest because their time patterns of consumption differ. California peaks in summer to meet air conditioning loads, and the Northwest peaks in winter because many homes and businesses use electric heating. If Southern California Edison delivers 1,000 megawatts of power to Seattle City Light in winter, the contract may specify that Seattle will return, say, 1,050 megawatts next summer. Although no cash changes hands, this transaction includes interest. Explain why.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M93113181

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