SSE (MC, MR and MO)

SSE (UK) – Marginal Cost (MC), Marginal Revenue (MR) and Output of Generation Business

As per the annual reports (FY2010-FY2014), cost, revenue and EBIT are listed in table 1 for electricity production and wholesale businesses. Marginal Output (MO), Marginal Cost (MC) and Marginal Revenue (MR) are also calculated (2011 to 2014).

SSE (2010 – 2014) – Output, cost, revenue, profit, MR, MC and MO

marginal-output

Table 1 Electricity production and wholesale businesses – Output, cost, revenue, and profit, MR, MC and MO (Source: Ofgem and SSE annual reports)

sse-marginal-revenue

Fig. 1 SSE – MR, MC and MO (2011-2014), (Murphy, 2015 – working paper)

MR line sits exactly on top of MC line and move across Marginal Output (MO) line. The trend of MO remained similar to MR and MC. Because of the dropping electricity demand (fig. 2a) during 2012-13 in the UK, both MR and MC dropped as indicated in fig. 2a & 2b.

  • MR = MC (FY2011-FY2014)
  • Marginal output shifted with MR and MC

aggregate-demand-changes

References:

Murphy D., 2015 – Working paper, Marginal revenue and marginal cost, Warwick Business School, unpublished.

SSE plc, 2010, Annual report 2010. [Online] Available at: http://sse.com/media/108238/2010AnnualReportAndAccounts.pdf [Accessed on 05 May 2015]

SSE plc, 2011, Annual report 2011. [Online] Available at: http://sse.com/media/108348/SSE_AnnualReport2011.pdf [Accessed on 05 May 2015]

SSE plc, 2012, Annual report 2012. [Online] Available at: http://sse.com/media/108440/SSE_AnnualReport2012.pdf [Accessed on 05 May 2015]

SSE plc, 2013, Annual report 2013. [Online] Available at: http://sse.com/media/108594/SSEplcAnnualReport2013_optimised.pdf [Accessed on 05 May 2015]

SSE plc, 2014, Annual report 2014. [Online] Available at: http://sse.com/media/241200/2014AnnualReport.pdf [Accessed on 05 May 2015]

Vahey S., 2015b – Working paper, Basic Macro Models (Aggregate demand/aggregate supply), Warwick Business School, unpublished.

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