After reading the article answer the following questions:

1. Draw a graph of this industry (firm).
2. Given the information in the article, identify where the firm is producing and any changes to the firm (demand, MR, MC, ATC, AVC, etc.) Explain why these changes are taking place.
3. Share on the graph where the rate hike would be (identify the changes on the graph and the new rate).

Here's the article:

Georgia Power rate hike hearing Tuesday

Public hearing Tuesday as Georgia Power seeks increased rate to better its profit margin

by Mary Landers

A proposed rate hike from Georgia Power could increase average electric bills by almost $11 a month starting in January.

Atlanta Gas Light is also asking for an increase in its rates that would add about $3 a month to customers' bills, also effective in January.

The Georgia Public Service Commission has yet to approve these rate increases. It will hold a public hearing on the issue Tuesday in Savannah.

Consumer advocacy group Georgia Watch is dead set against the proposed increases. Georgia Power's request comes on the heels of two other recently approved increases, noted Clare McGuire, director of the consumer energy program for Georgia Watch.

A fuel recovery fee that went into effect in April already added $5.59 to a typical residential customer's average bill. Another $1.39 a month will be tacked on to bills starting in January to finance the expansion of Plant Vogtle, the company's nuclear power plant on the Savannah River near Waynesboro. The Georgia legislature has already approved similarly sized yearly increases through 2017 that have customers paying in advance for the new reactors.

McGuire has been adding up the cumulative impact of all these increases, including the newly proposed one.

"By February 2013, the average residential customer will pay almost $28 more per month (compared to March 2010) before they even use one kilowatt hour," she said. "This is unacceptable, especially at this time when Georgia ranks at the top for foreclosures, unemployment and bankruptcy."

Georgia Power spokeswoman Lynn Wallace said the main drivers of its rate request are improvements the company has made.

"Mainly it's because we've invested $5 billion since 2007 in things like the reliability of the smart grid and cleaner natural gas generation," Wallace said. "We have very high costs for environmental controls to keep coal-burning units in compliance."

Higher profits are a motive, too. The regulated utility's current rate of profit is 11.25 percent. In its filing with the PSC, Georgia Power seeks to raise its profit margin to nearly 12 percent, which translates to roughly $84 million more of profit per year.

In addition to the rate increase and a higher profit margin, Georgia Power is also proposing a new arrangement in which two-thirds of its annual losses could be offset by imposing higher rates on customers without having to file a formal rate case with the PSC. As a result, Georgia Power shareholders would be responsible for only a third of all future losses.

Georgia Watch opposes that proposal, too, arguing it defeats the purpose of having regulated utilities.

"You lose the whole balancing aspect (of the PSC) if you don't force them to come in and request a rate increase," McGuire said.

Atlanta Gas Light is looking to make up for recent losses.

"We have suffered a net loss of customers for two years in a row for the first time in our company's history," said spokeswoman Tami Gerke. "We have not been adding new businesses or new homes to our Atlanta Gas Light system. Our proposed rate increase would cover our operating costs, allowing us to continue to deliver safe and reliable natural gas service to our customers."

But in filings earlier this month, the PSC litigation staff wrote that Atlanta Gas Light couldn't justify its current charges and accused the company of inflating its expenses to justify additional rate hikes. The staff is recommending that the company reduce its earnings by $15 million and explain these "phantom expenses."

"We hope the PSC takes this recommendation seriously," McGuire said. "In one our state's worst recessions, it's unacceptable that Georgians are paying inflated rates on their gas bills."

Final decisions by the PSC will be rendered Oct. 28 for the Atlanta Gas Light rate case and Dec. 21 for the Georgia Power rate case.

(This was all the information that the professor provided us with. There is no textbook, or any other info to solve this problem. I am confused as to whether my own solution is right, and thus wanted to check with expert answers.)