Author : Steve Cicala
Release : 2017
Genre : Electric power production
Kind : eBook
Book Rating : /5 ( reviews)
Book Synopsis Imperfect Markets Versus Imperfect Regulation in U.S. Electricity Generation by : Steve Cicala
Download or read book Imperfect Markets Versus Imperfect Regulation in U.S. Electricity Generation written by Steve Cicala. This book was released on 2017. Available in PDF, EPUB and Kindle. Book excerpt: This paper measures changes in electricity generation costs caused by the introduction of market mechanisms to determine output decisions in service areas that were previously using command-and-control-type operations. I use the staggered transition to markets from 1999-2012 to evaluate the causal impact of liberalization using a nationwide panel of hourly data on electricity demand and unit-level costs, capacities, and output. To address the potentially confounding effects of unrelated fuel price changes, I use machine learning methods to predict the allocation of output to generating units in the absence of markets for counterfactual production patterns. I find that markets reduce production costs by $3B per year by reallocating output among existing power plants: Gains from trade across service areas increase by 20% based on a 10% increase in traded electricity, and costs from using uneconomical units fall 20% from a 10% reduction in their operation.