I was listening to AM1470 on the radio the other day, they had a representative from BC Hydro to talk about the growing population and demand in BC. As the population grow, demand for electricity follows. It is expected to increase by 1.7 % every year for the next 10 years. Lower Mainland and Vancouver Island consume around 70% of the whole province's electricity. It is estimated that by the end of this decade, our existing generating resources will be unable to meet the demand. Because of this problem, they came up with an action plan. Their objective is to make British Columbia electricity self sufficient within the decade ahead. The enery plan encourages customers to to use electricity more effieciently or to use less at certain times. Here's a brief idea of how the plan works:

• customers sign up if they want to participate in this conservation plan
  
• two periods in a day - "rush hour" (from 3pm-10pm) & other times
• during rush hours, rate for electricity will be higher
• participants will receive a fixed amount of "rebate" for their higher rates

Personally, i don't think this plan will help meet their objective because during rush hour, this is when most people are home. They cook, shower, wash... etc. Resources won't be conserved even though they WANT to. You don't expect people to cook dinner after 10, do you? Rather than charging them more, I think a better plan would be giving out benefits to those who does not exceed a certain kWh in a month. Those who exceeds will not gain or lose anything.

How does this relate to Chapter 1 & 2:
Electricity is a scarce item. This is why we are trying to conserve resources for future use. But will this particular plan really help conserve resources? We can calculate the costs for a participant using the energy plan.

Question: Whether or not to participate in the energy conservation plan.
Choice: Participate

Oppourtunity Costs: enjoy lower rates

Actual Costs: -paying higher rates
-getting a fixed amount of "rebate" that does not neccessary cover the exceeded amount paid, in other words:
(higher rate x enery used) - (Rebate) - (Lower rate x energy used) = (+) num.

Because electricity is a necessary item, it has no substitutes, it is considered to be inelastic. The "PQ" graph does not really work on this issue, becaue when price goes up, quantity demanded is suppose to be lower. But in this case, price goes up during rush hour, and during this time, people are not able to use less.

For more information about the BCHydro plan, visit:
http://www.bchydro.com/