1. Suppose a regional power authority needs to adopt 20 MW of generation to service a growing population, and must do so at the lowest cost possible. You may assume the following: the forecast price of coal is $85/short ton, the forecast price for natural gas is $2.72/mmBTU, and wind in the area has a capacity factor of 41% and an install cost of $2.1 million per MW which is productive over a 25 year lifetime.

a. What is the price per kWh for each source?

b. If a carbon tax of $20 per metric ton of carbon dioxide is put in place which source provides the lowest cost for customers?