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Have Renewable Portfolio Standards Raised Electricity Rates? Evidence From U.S. Electric Utilities

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  • Constant I. Tra

Abstract

type="main" xml:id="coep12110-abs-0001"> Using a panel dataset of U.S. electric utilities, we investigate the effect of a Renewable Portfolio Standards (RPS) on the rates of electric utilities affected by the mandate. Our findings are twofold. First, we find that, on average, electric utilities affected by an RPS mandate charged a higher electricity rate. This would suggest that an RPS mandate is a costly constraint on the utilities that have to comply with the requirement. The second finding of our analysis is that marginal increases in a utility's RPS requirement do not necessarily translate into higher electricity rates. This would imply that the costs imposed on utilities affected by the RPS mandate tend to be fixed costs rather than variable costs. We also find that controlling for time-varying unobserved factors at the state level is key to identifying the RPS effect on electricity retail rates. (JEL Q42, Q48, L98)

Suggested Citation

  • Constant I. Tra, 2016. "Have Renewable Portfolio Standards Raised Electricity Rates? Evidence From U.S. Electric Utilities," Contemporary Economic Policy, Western Economic Association International, vol. 34(1), pages 184-189, January.
    • Handle: RePEc:bla:coecpo:v:34:y:2016:i:1:p:184-189
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    File URL: http://hdl.handle.net/10.1111/coep.2016.34.issue-1
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    Citations

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    Cited by:

    1. Hartley, Peter R. & Medlock, Kenneth B. & Jankovska, Olivera, 2019. "Electricity reform and retail pricing in Texas," Energy Economics, Elsevier, vol. 80(C), pages 1-11.
    2. Lee, Kangoh, 2023. "Renewable portfolio standards and electricity prices," Energy Economics, Elsevier, vol. 126(C).
    3. Jed J. Cohen & Levan Elbakidze & Randall Jackson, 2022. "Interstate protectionism: the case of solar renewable energy credits," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(2), pages 717-738, March.
    4. Anthony Oliver & Madhu Khanna, 2018. "The spatial distribution of welfare costs of Renewable Portfolio Standards in the United States electricity sector," Letters in Spatial and Resource Sciences, Springer, vol. 11(3), pages 269-287, October.
    5. Mai, Trieu & Cole, Wesley & Gates, Nathaniel & Greer, Daniel, 2021. "The prospective impacts of 2019 state energy policies on the U.S. electricity system," Energy Policy, Elsevier, vol. 149(C).
    6. Ann Wolverton & Ron Shadbegian & Wayne Gray, 2022. "The U.S. Manufacturing Sector�s Response to Higher Electricity Prices: Evidence from State-Level Renewable Portfolio Standards," Working Papers 22-47, Center for Economic Studies, U.S. Census Bureau.
    7. Zhou, Shan & Solomon, Barry D., 2020. "Do renewable portfolio standards in the United States stunt renewable electricity development beyond mandatory targets?," Energy Policy, Elsevier, vol. 140(C).
    8. Kim, Jung Eun & Tang, Tian, 2020. "Preventing early lock-in with technology-specific policy designs: The Renewable Portfolio Standards and diversity in renewable energy technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 123(C).
    9. Byeong Gwan Bhang & Gyu Gwang Kim & Hae Lim Cha & David Kwangsoon Kim & Jin Ho Choi & So Young Park & Hyung Keun Ahn, 2018. "Design Methods of Underwater Grounding Electrode Array by Considering Inter-Electrode Interference for Floating PVs," Energies, MDPI, vol. 11(4), pages 1-16, April.

    More about this item

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy

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