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Does Electricity Restructuring Work? Evidence From The U.S. Nuclear Energy Industry

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  • FAN ZHANG

Abstract

This paper examines whether electricity restructuring improves the efficiency of U.S. nuclear power generation. Using a panel dataset consisting of the full sample of 73 investor‐owned nuclear plants in the United States from 1992 to 1998, I estimate the plant‐level cross‐sectional and longitudinal efficiency changes associated with restructuring. Special attention is given to the potential policy endogeneity bias and different modeling strategies are presented to cope with the issue. Overall, I find a striking positive relationship between restructuring and cost reduction, and increased plant utilization.

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  • Fan Zhang, 2007. "Does Electricity Restructuring Work? Evidence From The U.S. Nuclear Energy Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 55(3), pages 397-418, September.
    • Handle: RePEc:bla:jindec:v:55:y:2007:i:3:p:397-418
    DOI: 10.1111/j.1467-6451.2007.00317.x
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    1. Kleit, Andrew N. & Shcherbakova, Anastasia V. & Chen, Xu, 2012. "Restructuring and the retail residential market for power in Pennsylvania," Energy Policy, Elsevier, vol. 46(C), pages 443-451.
    2. Stefan Seifert & Astrid Cullmann & Christian von Hirschhausen, 2014. "Technical Efficiency and CO2 Reduction Potentials: An Analysis of the German Electricity Generating Sector," Discussion Papers of DIW Berlin 1426, DIW Berlin, German Institute for Economic Research.
    3. 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).
    4. Tilman Klumpp & Xuejuan Su, 2015. "Strategic Investment under Open Access: Theory and Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 63(3), pages 495-521, September.
    5. Berthélemy Michel & Bonev Petyo & Dussaux Damien & Söderberg Magnus, 2019. "Methods for strengthening a weak instrument in the case of a persistent treatment," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 23(1), pages 1-30, February.
    6. 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.
    7. Ajayi, Victor & Weyman-Jones, Tom, 2021. "State-level electricity generation efficiency: Do restructuring and regulatory institutions matter in the US?," Energy Economics, Elsevier, vol. 104(C).
    8. J. Dean Craig and Scott J. Savage, 2013. "Market Restructuring, Competition and the Efficiency of Electricity Generation: Plant-level Evidence from the United States 1996 to 2006," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    9. James G. Mulligan & Daniel J. Wedzielewski, 2012. "Government Intervention to Prevent Bankruptcy: the Effect of Blind-Bidding Laws on Movie Theaters," Working Papers 12-03, University of Delaware, Department of Economics.
    10. Radygin, Alexander & Simachev, Yury & Entov, Revold, 2015. "The state-owned company: “State failure” or “market failure”?1," Russian Journal of Economics, Elsevier, vol. 1(1), pages 55-80.
    11. Zhen Lei & Chen-Hao Tsai & Andrew N. Kleit, 2017. "Deregulation and Investment in Generation Capacity: Evidence from Nuclear Power Uprates in the United States," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    12. Karney, Daniel H., 2019. "Electricity market deregulation and environmental regulation: Evidence from U.S. nuclear power," Energy Economics, Elsevier, vol. 84(C).
    13. Linares, Pedro & Conchado, Adela, 2013. "The economics of new nuclear power plants in liberalized electricity markets," Energy Economics, Elsevier, vol. 40(S1), pages 119-125.
    14. Alexander Hill, 2023. "Price freezes and gas pass-through: an estimation of the price impact of electricity market restructuring," Journal of Regulatory Economics, Springer, vol. 63(1), pages 87-116, April.
    15. Mou, Dunguo, 2014. "Understanding China’s electricity market reform from the perspective of the coal-fired power disparity," Energy Policy, Elsevier, vol. 74(C), pages 224-234.
    16. Xuejuan Su, 2015. "Have customers benefited from electricity retail competition?," Journal of Regulatory Economics, Springer, vol. 47(2), pages 146-182, April.
    17. Seifert, Stefan & Cullmann, Astrid & von Hirschhausen, Christian, 2016. "Technical efficiency and CO2 reduction potentials — An analysis of the German electricity and heat generating sector," Energy Economics, Elsevier, vol. 56(C), pages 9-19.
    18. Massimiliano Piacenza & Davide Vannoni, 2009. "Vertical And Horizontal Economies In The Electric Utility Industry: An Integrated Approach," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(3), pages 431-450, September.
    19. Ajayi, V. & Weyman-Jones, T., 2021. "State-Level Electricity Generation Efficiency: Do Restructuring and Regulatory Institutions Matter in the US?," Cambridge Working Papers in Economics 2166, Faculty of Economics, University of Cambridge.
    20. Fumitoshi Mizutani & Hideo Kozumi & Noriaki Matsushima, 2009. "Does yardstick regulation really work? Empirical evidence from Japan’s rail industry," Journal of Regulatory Economics, Springer, vol. 36(3), pages 308-323, December.
    21. Mohammad Ali Motafakker Azad & Mohsen Pourebadollahan Covich & Sakineh Sojoodi, 2015. "The Impact of Electricity Competitive Market Establishment on Technical Efficiency of Thermal Power Plants in Iran," International Journal of Energy Economics and Policy, Econjournals, vol. 5(4), pages 1010-1015.
    22. Lei, Zhen & Tsai, Chen-Hao, 2019. "Market deregulation and nuclear safety," Energy Economics, Elsevier, vol. 82(C), pages 62-67.

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