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Evidence on U.S. Electricity Prices: Regulated Utility vs. Restructured States

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  • Eric L. Prentis

    (Department of Economics, Finance & DIS, University of St. Thomas, Houston, TX, USA.)

Abstract

Economic theory states that free market competition naturally achieves lower prices thereby increasing efficiency and benefiting society. This is the first paper in the literature to use means testing to statistically analyze electricity prices, from 1970-2011, for states that restructure their electric utilities pre-and-post restructuring relative to U.S. electricity prices; thus determining whether restructured electricity utility states are more or less efficient, after restructuring, than before. This fundamental empirical evidence is sought to explain whether expected operating synergies are being realized and stockholders are gaining or losing relative value once states restructure and electric companies are merged or acquired. This paper s empirical results are timely and important to future energy policy in this crucial to the economy electric power industry and establish whether free market economic theory is being appropriately applied in states that restructure their verticallyintegrated government-regulated natural monopoly electric utilities. Future research is suggested.

Suggested Citation

  • Eric L. Prentis, 2015. "Evidence on U.S. Electricity Prices: Regulated Utility vs. Restructured States," International Journal of Energy Economics and Policy, Econjournals, vol. 5(1), pages 253-262.
    • Handle: RePEc:eco:journ2:2015-01-20
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    References listed on IDEAS

    as
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    5. William J. Hausman & John L. Neufeld, 2011. "How politics, economics, and institutions shaped electric utility regulation in the United States: 1879--2009," Business History, Taylor & Francis Journals, vol. 53(5), pages 723-746, August.
    6. John Becker-Blease & Lawrence Goldberg & Fred Kaen, 2008. "Mergers and acquisitions as a response to the deregulation of the electric power industry: value creation or value destruction?," Journal of Regulatory Economics, Springer, vol. 33(1), pages 21-53, February.
    7. Nakajima, Tadahiro & Hamori, Shigeyuki, 2010. "Change in consumer sensitivity to electricity prices in response to retail deregulation: A panel empirical analysis of the residential demand for electricity in the United States," Energy Policy, Elsevier, vol. 38(5), pages 2470-2476, May.
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    Cited by:

    1. Alexandar Angelus, 2021. "Distributed Renewable Power Generation and Implications for Capacity Investment and Electricity Prices," Production and Operations Management, Production and Operations Management Society, vol. 30(12), pages 4614-4634, December.
    2. Paryono Paryono & Absori Absori & Khudzaifah Dimyati & Muinudinillah Basri & Shinta Dewi Rismawati, 2020. "Liberalization and Electricity Policy Changes: Problems and Challenges in the Electricity Sector in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 170-177.

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    More about this item

    Keywords

    Electric utilities; Restructuring; Operating efficiency; Free market competition;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law

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