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Effciency and Environmental Impacts of Electricity Restructuring on Coal-Fired Power Plants

Author

Listed:
  • H. Ron Chan

    (Department of Economics, University of Maryland)

  • Harrison Fell

    (Division of Economics and Business, Colorado School of Mines)

  • Ian Lange

    (University of Stirling)

  • Shanjun Li

    (Dyson School of Applied Economics and Management)

Abstract

We investigate the impacts of electricity market restructuring on fuel effciency, utilization and, new to this area, cost of coal purchases among coal-fired power plants using a panel data set from 1991 to 2005. Our study focuses exclusively on coal-fired power plants and uses panel data covering several years after implementation of restructuring. The estimation compares how investor-owned (IOs) plants in states with restructuring changed their behavior relative to IOs in states without. Our analysis finds that restructuring led to: (1) a two percent improvement in fuel effciency for IOs, (2) a ten percent decrease in unit cost of heat input, and (3) a lower capacity factor even after adjusting for cross-plant generation re-allocation due to cost reductions. Based on these estimates, back-of-the-envelope calculations find that restructuring has led to about 6.5 million dollars in annual cost savings or nearly 12 percent of operating expenses and up to 7.6 percent emissions reduction per plant.

Suggested Citation

  • H. Ron Chan & Harrison Fell & Ian Lange & Shanjun Li, 2013. "Effciency and Environmental Impacts of Electricity Restructuring on Coal-Fired Power Plants," Working Papers 2013-01, Colorado School of Mines, Division of Economics and Business.
    • Handle: RePEc:mns:wpaper:wp201301
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    More about this item

    Keywords

    Electricity Restructuring; Firm Behavior; Emissions;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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