IDEAS home Printed from https://ideas.repec.org/a/aen/journl/2006v27-01-a06.html
   My bibliography  Save this article

Measuring Gains from Regional Dispatch: Coal-Fired Power Plant Utilization and Market Reforms

Author

Listed:
  • Stratford Douglas

Abstract

This paper examines changes in the utilization rates (annual capacity factors) of coal-burning power plants in the eastern United States after 1996, when federal regulators opened the transmission system to wholesale power markets. This and other accompanying market-oriented reforms were intended to improve efficiency by encouraging regional dispatch by independent system operators. If the reforms made dispatch more efficient, then utilization rates of high-cost plants should have fallen relative to those of low-cost plants since 1996. A difference-in-difference model using plant-level panel data indicates that relative utilization rates of high-cost plants did indeed fall after 1996, but only in regions with independent system operators. Simulations indicate cost savings on the order of two to three percent.

Suggested Citation

  • Stratford Douglas, 2006. "Measuring Gains from Regional Dispatch: Coal-Fired Power Plant Utilization and Market Reforms," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 119-138.
    • Handle: RePEc:aen:journl:2006v27-01-a06
    as

    Download full text from publisher

    File URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=2119
    Download Restriction: Access to full text is restricted to IAEE members and subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    2. Caves, Douglas W & Christensen, Laurits R & Swanson, Joseph A, 1981. "Productivity Growth, Scale Economies, and Capacity Utilization in U.S. Railroads, 1955-74," American Economic Review, American Economic Association, vol. 71(5), pages 994-1002, December.
    3. Severin Borenstein & James Bushnell, 1999. "An Empirical Analysis of the Potential for Market Power in California’s Electricity Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(3), pages 285-323, September.
    4. Timothy J. Considine, 2000. "Cost Structures for Fossil Fuel-Fired Electric Power Generation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 83-104.
    5. Nelson, Randy A., 1985. "Returns to scale from variable and total cost functions : Evidence from the electric power industry," Economics Letters, Elsevier, vol. 18(2-3), pages 271-276.
    6. Christensen, Laurits R & Greene, William H, 1976. "Economies of Scale in U.S. Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 655-676, August.
    7. Erin T. Mansur, 2003. "Vertical Integration in Restructured Electricity Markets: Measuring Market Efficiency and Firm Conduct," Yale School of Management Working Papers ysm430, Yale School of Management.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chan, H. Ron & Fell, Harrison & Lange, Ian & Li, Shanjun, 2017. "Efficiency and environmental impacts of electricity restructuring on coal-fired power plants," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 1-18.
    2. Andreas Ferrara and Ian Lange, 2014. "Voluntary Programs to Encourage Diffusion: The Case of the Combined Heat-and-Power Partnership," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    3. Arina Nikandrova & Jevgenijs Steinbuks, 2017. "Contracting for the second best in dysfunctional electricity markets," Journal of Regulatory Economics, Springer, vol. 51(1), pages 41-71, February.
    4. Pickl, Matthias & Wirl, Franz, 2011. "Auction design for gas pipeline transportation capacity--The case of Nabucco and its open season," Energy Policy, Elsevier, vol. 39(4), pages 2143-2151, April.
    5. Matthew Barmack & Edward Kahn & Susan Tierney, 2007. "A cost-benefit assessment of wholesale electricity restructuring and competition in New England," Journal of Regulatory Economics, Springer, vol. 31(2), pages 151-184, April.
    6. Pollitt, M. J., 2011. "Lessons from the History of Independent System Operators in the Energy Sector, with applications to the Water Sector," Cambridge Working Papers in Economics 1153, Faculty of Economics, University of Cambridge.
    7. Chu, Yin & Chang, Chun-Ping, 2020. "Vertical separation of transmission control and market efficiency in the wholesale electricity market," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    8. Oseni, Musiliu O. & Pollitt, Michael G., 2014. "Institutional arrangements for the promotion of regional integration of electricity markets : international experience," Policy Research Working Paper Series 6947, The World Bank.
    9. Chu, Yin & Gao, Juanxia & Li, Haoyang, 2023. "Wind power expansion and regional allocative efficiency among fossil-fuel electricity generators," International Journal of Industrial Organization, Elsevier, vol. 91(C).
    10. Karney, Daniel H., 2019. "Electricity market deregulation and environmental regulation: Evidence from U.S. nuclear power," Energy Economics, Elsevier, vol. 84(C).
    11. Pollitt, Michael G., 2012. "Lessons from the history of independent system operators in the energy sector," Energy Policy, Elsevier, vol. 47(C), pages 32-48.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ajayi, Victor & Weyman-Jones, Thomas & Glass, Anthony, 2017. "Cost efficiency and electricity market structure: A case study of OECD countries," Energy Economics, Elsevier, vol. 65(C), pages 283-291.
    2. Vítor Marques & Isabel Soares & Adelino Fortunato, 2012. "Application of a Structural Model to the Spanish Electricity Wholesale Market," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 65-108.
    3. Walheer, Barnabé, 2018. "Scale efficiency for multi-output cost minimizing producers: The case of the US electricity plants," Energy Economics, Elsevier, vol. 70(C), pages 26-36.
    4. Martín Rossi, 2015. "Using Labor Productivity Change Estimates as an Input for X-Factors in Price-Cap Regulation," Working Papers 118, Universidad de San Andres, Departamento de Economia, revised Feb 2015.
    5. Swetlana Renner & Thomas Glauben & Heinrich Hockmann, 2014. "Measurement and decomposition of flexibility of multi-output firms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 41(5), pages 745-773.
    6. Du, Limin & He, Yanan & Yan, Jianye, 2013. "The effects of electricity reforms on productivity and efficiency of China's fossil-fired power plants: An empirical analysis," Energy Economics, Elsevier, vol. 40(C), pages 804-812.
    7. Amir Jahan Khan, 2014. "The Comparative Efficiency of Public and Private Power Plants in Pakistan’s Electricity Industry," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(2), pages 1-26, July-Dec.
    8. Oliver, Matthew E., 2015. "Economies of scale and scope in expansion of the U.S. natural gas pipeline network," Energy Economics, Elsevier, vol. 52(PB), pages 265-276.
    9. Gugler, Klaus & Liebensteiner, Mario, 2019. "Productivity growth and incentive regulation in Austria's gas distribution," Energy Policy, Elsevier, vol. 134(C).
    10. Subal C. Kumbhakar & Gudbrand Lien, 2017. "Yardstick Regulation of Electricity Distribution Disentangling Short-run and Long-run Inefficiencies," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    11. Bernstein, David H., 2020. "An updated assessment of technical efficiency and returns to scale for U.S. electric power plants," Energy Policy, Elsevier, vol. 147(C).
    12. Bernstein, David H. & Parmeter, Christopher F., 2019. "Returns to scale in electricity generation: Replicated and revisited," Energy Economics, Elsevier, vol. 82(C), pages 4-15.
    13. Carlo Cambini & Massimiliano Piacenza & Davide Vannoni, 2007. "Restructuring Public Transit Systems: Evidence on Cost Properties from Medium and Large-Sized Companies," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 31(3), pages 183-203, November.
    14. Giovanni Fraquelli & Massimiliano Piacenza & Graziano Abrate, 2004. "Regulating Public Transit Networks: How do Urban‐Intercity Diversification and Speed‐up Measures Affect Firms’ Cost Performance?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 75(2), pages 193-225, June.
    15. Ali Akkemik, K., 2009. "Cost function estimates, scale economies and technological progress in the Turkish electricity generation sector," Energy Policy, Elsevier, vol. 37(1), pages 204-213, January.
    16. Serge Garcia & Alban Thomas, 2001. "The Structure of Municipal Water Supply Costs: Application to a Panel of French Local Communities," Journal of Productivity Analysis, Springer, vol. 16(1), pages 5-29, July.
    17. Joanna Piechucka, 2021. "Cost efficiency and endogenous regulatory choices: evidence from the transport industry in France," Journal of Regulatory Economics, Springer, vol. 59(1), pages 25-46, February.
    18. Kumbhakar, Subal C. & Wang, Hung-Jen, 2006. "Estimation of technical and allocative inefficiency: A primal system approach," Journal of Econometrics, Elsevier, vol. 134(2), pages 419-440, October.
    19. Yin Chu, 2021. "Vertical Separation of Transmission Control and Regional Production Efficiency in the Electricity Industry," The Energy Journal, , vol. 42(1), pages 197-228, January.
    20. Engberg, John & Wholey, Douglas & Feldman, Roger & Christianson, Jon B., 2004. "The effect of mergers on firms' costs: evidence from the HMO industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(4), pages 574-600, September.

    More about this item

    JEL classification:

    • F0 - International Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aen:journl:2006v27-01-a06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: David Williams (email available below). General contact details of provider: https://edirc.repec.org/data/iaeeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.