year is the mean, yhat is the fitted value (from the linear regression equation) and y is the observed value. R2 measures the ratio of the variances of the fitted values over the observed values. The variance is the sum of the squares of the difference between each value and the mean.
The picture doesn't appear so I'm guessing what it contains. R2=164065/189671=0.8650 approx.
This means that 86.50% of the variation in cost is explained by the correlation of cost and power (answer 3).