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The average cost of supply is the utility's total cost divided by

  • A.the peak demand recorded
  • B.the energy sold
  • C.the energy generated
  • D.the number of consumers

Answer: B

Correct answer: the energy sold

The average cost of supply is the total cost of serving consumers divided by the units actually sold, not generated. The distinction is substantial, because the difference between the two is the transmission and distribution loss, which the utility must recover on the units it manages to bill.

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