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Consolidation and ownership trends of nonfederal hydropower generating assets, 1980-2003

Listed author(s):
  • Kosnik, Lea

This paper analyzes ownership trends of nonfederal hydropower generating assets from 1980-2003. Previous research has shown that the overall electricity industry is unique in that, because of the extreme inelasticity of demand for power, even small sectors of the industry have the potential to exhibit substantial price setting behavior. Hydropower assets especially, with their unique ability to "shift" electricity between time periods, have the potential to be used to exhibit horizontal market power. For this reason, an analysis of consolidation trends of hydropower assets is important. Our empirical results show that from 1980-2003, while transfer rates of nonfederal hydropower dams have been substantial (at 46%), there is little evidence of consolidation leading to the potential exercise of horizontal market power as a result of this. A detailed look at the data reveals that it is smaller dams, with less power production capacity, that have tended to be transferred more than other dams over this time period, and that it is private industrial owners and private utilities that are selling dams to private non-utility generation companies. This suggests that a realignment of hydropower assets, most likely in response to state-and federal-level regulatory initiatives, is taking place, but that increasing consolidation along with this is currently not a threat.

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File URL: http://www.sciencedirect.com/science/article/pii/S0140-9883(07)00110-7
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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 30 (2008)
Issue (Month): 3 (May)
Pages: 715-731

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Handle: RePEc:eee:eneeco:v:30:y:2008:i:3:p:715-731
Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

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  1. Paul L. Joskow, 1997. "Restructuring, Competition and Regulatory Reform in the U.S. Electricity Sector," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 119-138, Summer.
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  7. Borenstein, Severin & Bushnell, James, 1999. "An Empirical Analysis of the Potential for Market Power in California's Electricity Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(3), pages 285-323, September.
  8. Kamerschen, David R. & Klein, Peter G. & Porter, David V., 2005. "Market structure in the US electricity industry: A long-term perspective," Energy Economics, Elsevier, vol. 27(5), pages 731-751, September.
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  10. Lea Kosnik, 2010. "Balancing Environmental Protection and Energy Production in the Federal Hydropower Licensing Process," Land Economics, University of Wisconsin Press, vol. 86(3).
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  12. Richard Schmalensee & Bennett W. Golub, 1984. "Estimating Effective Concentration in Deregulated Wholesale Electricity Markets," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 12-26, Spring.
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