Q3. (a) Two different tariff strategies, both adopting progressive increase structure, are shown in Figure Q3.1. Identify the differences between the strategies and discuss the reason(s) and implication(s). (10 marks)

(b) Discuss the changes to an electric power sector which adopted the tariff Strategy A as shown in Fig.Q3.1 with possible reasons and the rationale of the changes. (10 marks)

(c) Carbon tax of HK$500/Ton CO2 has been planned to be imposed to households with an electricity consumption level higher than 500 kWh. By identifying the carbon emission factor for electricity in Hong Kong, determine the carbon tax rate in HK$/kWh and discuss the implications. (5 marks)

111 Strategy A ii Price $/Unit consumption i Strategy B ii 2000 1000 kWh/household Figure Q3.1 Tariff strategies A & B 111 Strategy A ii Price $/Unit consumption i Strategy B ii 2000 1000 kWh/household Figure Q3.1 Tariff strategies A & B