In the first scenario, Motown Hydro is practicing first degree price discrimination, while in the second scenario Motown is practicing third degree price discrimination. Second degree price discrimination is not involved in the example scenarios because quantification of product being priced is not differentiated in the discriminatory pricing of either Motown example.
Price discrimination is practiced in industries with full monopoly or a degree of monopoly power: "The firm must have some degree of monopoly power" (EconomicsOnline.co.uk). The most common and concise definition of monopolistic price discrimination is: "Price discrimination is the practice of charging a different price for the same good or service" (EconomicsOnline.co.uk). The three kinds of price discrimination are first degree (individual based), second degree (quantification based) and third degree (group or subset based).
Some economists define these degrees from the perspective of the consumer, using language that emphasizes what the consumer is willing to pay and identifying discriminated groups by differentiation such as (1) individual willingness to pay price discrimination, (2) demographic willingness to pay price discrimination, and (3) consumer group or subset willingness to pay price discrimination.
Some economists define these degrees from the perspective of the producer. My preference is for defining price discrimination from the perspective of the producer (instead of the consumer). From the producer perspective, language is used that emphasizes the different prices charged for the same good or service. The discriminated groups are identified by differentiation of (1) charging the maximum price for each unit of good or service to capture all consumer surplus across all potential consumers; (2) charging different prices for different quantities of product; (3) charging different prices to different consumer groups or sets.
By these definitions and differentiations, in the first scenario Motown is maximizing the price they charge for each unit to Consumers 1 and 2 in order to capture all available consumer surplus across all present consumers, thus they are practicing first degree price discrimination. By definitions and differentiations, in the second scenario Motown has general knowledge of the income levels of two consumer groups, Consumer 1 and Consumer 2, and are, through pricing self-selection, charging different prices to different groups or sets of consumers, thus they are practicing third degree price discrimination.
Quantity of good or service is not a consideration in the two example scenarios, so second degree price discrimination is not involved. To clarify, if Motown charged price variations based upon consumption (e.g., 10% off if you consume less than the average household of 12,000 square feet), this would represent second degree price discrimination.