Explanation:
Below is the detailed explanation of the correct answer:

1. Electricity generated by various power stations is not consumed entirely by ultimate consumers:
One of the challenges in the power sector is that the electricity generated by various power stations is not consumed entirely by ultimate consumers. This means that there is a gap between the amount of electricity generated and the actual consumption by end-users. There can be several reasons for this:

- Transmission and Distribution Losses: During the transmission and distribution of electricity from power stations to end-users, there are losses in the form of heat and resistance in the electrical lines. These losses can be significant, especially over long distances, and result in a reduction in the amount of electricity reaching the consumers.

- Theft and Pilferage: Another reason for the gap between electricity generation and consumption is theft and pilferage. In some areas, illegal connections are made, and electricity is stolen without being recorded by the utility companies. This results in a loss of revenue for the power sector and an increase in the gap between generation and consumption.

- Inefficient Distribution System: Inefficient distribution systems can also contribute to the gap between generation and consumption. Poor maintenance of electrical infrastructure, outdated equipment, and lack of investment in distribution networks can lead to losses and inefficiencies in the system.

2. The installed capacity is over-utilized:
Another challenge in the power sector is that the installed capacity is over-utilized. This means that the demand for electricity exceeds the available capacity to generate it. There are several reasons for this:

- Increase in Electricity Demand: With the growth of industries, urbanization, and population, there is an increasing demand for electricity. This demand often exceeds the capacity of power plants to generate electricity, leading to over-utilization of the installed capacity.

- Insufficient Investment in Power Generation: Another reason for the over-utilization of installed capacity is the lack of sufficient investment in power generation. If there is not enough investment in building new power plants or upgrading existing ones, the capacity to generate electricity will lag behind the growing demand.

- Inadequate Fuel Supply: Power plants require fuel, such as coal, natural gas, or oil, to generate electricity. If there is an inadequate supply of fuel, the power plants may not be able to operate at their full capacity, leading to over-utilization of the available capacity.

In conclusion, both statements are correct. The electricity generated by power stations is not consumed entirely by ultimate consumers due to transmission and distribution losses, theft, and pilferage. Additionally, the installed capacity is over-utilized due to increasing electricity demand, insufficient investment in power generation, and inadequate fuel supply.