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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

    () (Illinois State University, Department of Economics)

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.

Suggested Citation

  • L. Dean Hiebert, 2002. "The Determinants of the Cost Efficiency of Electric Generating Plants: A Stochastic Frontier Approach," Southern Economic Journal, Southern Economic Association, vol. 68(4), pages 935-946, April.
  • Handle: RePEc:sej:ancoec:v:68:4:y:2002:p:935-946
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