Question

An electrical utility offers reduced rates to homeowners who have installed “peak hours” meters. These meters effectively shut off high-consumption electrical appliances (primarily dishwashers and clothes driers) during the peak electrical usage hours between 3:00 PM and 9:00 PM daily. There are 84,000 such meters in use and the utility decided to inspect a random sample of 1500 meters to determine the proportion that are not working, either because they were bypassed or because of equipment failures. The goal of the inspection is to consider replacing all the meters if more than 12% of them are not working. The findings show that 90 were not working because of bypass and 60 were not working due to equipment failure. Please calculate and interpret the 98% confidence interval for the population proportion of the bypassed meters, equipment failure meters, and nonworking meters. Please show the necessary steps. Based on your results and the utility’s goal, do you think replacement of all the meters will be necessary? Please justify your answer

Answer 1