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Measuring Gains from Regional Dispatch: Coal-Fired Power Plant Utilization and Market Reforms

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  • Stratford Douglas

Abstract

This paper examines changes in the utilization rates (annual capacity factors) of coal-burning power plants in the eastern United States after 1996, when federal regulators opened the transmission system to wholesale power markets. This and other accompanying market-oriented reforms were intended to improve efficiency by encouraging regional dispatch by independent system operators. If the reforms made dispatch more efficient, then utilization rates of high-cost plants should have fallen relative to those of low-cost plants since 1996. A difference-in-difference model using plant-level panel data indicates that relative utilization rates of high-cost plants did indeed fall after 1996, but only in regions with independent system operators. Simulations indicate cost savings on the order of two to three percent.

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Bibliographic Info

Article provided by International Association for Energy Economics in its journal The Energy Journal.

Volume (Year): Volume 27 (2006)
Issue (Month): Number 1 ()
Pages: 119-138

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Handle: RePEc:aen:journl:2006v27-01-a06

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Cited by:
  1. H. Ron Chan & Harrison Fell & Ian A. Lange & Shanjun Li, 2013. "Efficiency and Environmental Impacts of Electricity Restructuring on Coal-Fired Power Plants," CESifo Working Paper Series 4160, CESifo Group Munich.
  2. Matthew Barmack & Edward Kahn & Susan Tierney, 2007. "A cost-benefit assessment of wholesale electricity restructuring and competition in New England," Journal of Regulatory Economics, Springer, vol. 31(2), pages 151-184, April.
  3. Pollitt, M. J., 2011. "Lessons from the History of Independent System Operators in the Energy Sector, with applications to the Water Sector," Cambridge Working Papers in Economics 1153, Faculty of Economics, University of Cambridge.
  4. Nikandrova, Arina & Steinbuks, Jevgenijs, 2014. "Contracting for the second best in dysfunctional electricity markets," Policy Research Working Paper Series 6955, The World Bank.
  5. Ferrara, Andreas & Lange, Ian, 2011. "Voluntary Programs to Encourage Diffusion: The Case of the Combined Heat-and-Power Partnership," Stirling Economics Discussion Papers 2011-16, University of Stirling, Division of Economics.

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