11. Jim Jackson, a rate analyst for the Washington Water Power Company, while preparing for a rate case needed to forecast electric residential revenue for 1996. Jim decided to investigate three potential predictor variables: residential use in kilowatt-hours (kWh), residential charge per kWh (cents/kWh), and number of residential electric customers. He collected data from 1968 to 1995. The data are shown in Table P-11. Jim testified before the Idaho Rate Commission and was asked if serial correlation was a problem. He didn’t know the answer and has asked you to write a response to the commission’s question.

TABLE P-9 Year Motor Fuel Consumed by Cars (billions of gallons) Y Price of Gasoline ($/gallon) X1 U.S. Population (millions) X2 1973 78.8 .39 211.9 1974 75.1 .53 213.9 1975 76.4 .57 216.0 1976 79.7 .59 218.0 1977 80.4 .62 220.2 1978 81.7 .63 222.6 1979 77.1 .86 225.1 1980 71.9 1.19 227.7 1981 71.0 1.33 230.1 1982 70.1 1.26 232.5 1983 69.9 1.22 234.8 1984 68.7 1.21 236.3 1985 69.3 1.16 238.5 1986 71.4 .92 240.7 1987 70.6 .95 242.8 1988 71.7 .95 245.1