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The Determinants of the Cost Efficiency of Electric Generating Plants: A Stochastic Frontier Approach

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  • L. Dean Hiebert

Abstract

This article provides a detailed analysis of generation plant operating cost efficiency over the period 1988‐1997. I estimate a stochastic frontier cost function together with a model of plant inefficiencies to measure the operating efficiencies of individual plants and identify factors that are associated with variations in plant efficiencies. I find evidence that plant efficiencies are associated with capacity utilization of the plant, the number of plants under utility management, and ownership form. I also find that regulatory restructuring activity in certain states is associated with improvements in plant operating performance.

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  • L. Dean Hiebert, 2002. "The Determinants of the Cost Efficiency of Electric Generating Plants: A Stochastic Frontier Approach," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 935-946, April.
    • Handle: RePEc:wly:soecon:v:68:y:2002:i:4:p:935-946
    DOI: 10.1002/j.2325-8012.2002.tb00467.x
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    2. Renjie Yu & Peng Yuan & Fandi Yang & Gongxiong Jiang, 2023. "Effects of Vertical Unbundling on the Operational and Environmental Efficiency of Chinese Thermal Power Firms," Energies, MDPI, vol. 16(21), pages 1-22, October.
    3. Sebastian Cuadros & Yeny E. Rodríguez & Javier Contreras, 2023. "Determinants of the Efficiency of Electricity Generation in Latin America and Caribbean Countries Using a Cragg’s Regression Model," Energies, MDPI, vol. 16(23), pages 1-18, December.
    4. Mark Newton Lowry & Lullit Getachew & David Hovde, 2005. "Econometric Benchmarking of Cost Performance: The Case of U.S. Power Distributors," The Energy Journal, , vol. 26(3), pages 75-92, July.
    5. Yu, Chin-Hsien & Zhao, Jinsong & Qin, Ping & Wang, Shinn-Shyr & Lee, Wen-Chieh, 2022. "Comparison of misallocation between the Chinese thermal power and hydropower electricity industries," Economic Modelling, Elsevier, vol. 116(C).

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