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Do Renewables Portfolio Standards Increase Electricity Prices? A Synthetic Control Approach

Author

Listed:
  • Karen Maguire

    () (Oklahoma State University)

  • Abdul Munasib

    () (University of Georgia)

Abstract

We examine whether state level Renewable Portfolio Standards (RPS) influence prices in the electricity market. While vital environmental goals underlie the rationale for RPS there exists a potential for negative welfare impacts through increased costs of electricity generation forcing consumers to allocate a larger portion of their income to energy consumption. We employ the Synthetic Control Method (SCM) for comparative case study and focus on Texas, an early adopter of RPS and arguably a success story. We find that RPS increased residential, industrial and total electricity prices while commercial prices were unaffected.

Suggested Citation

  • Karen Maguire & Abdul Munasib, 2013. "Do Renewables Portfolio Standards Increase Electricity Prices? A Synthetic Control Approach," Economics Working Paper Series 1403, Oklahoma State University, Department of Economics and Legal Studies in Business, revised Aug 2013.
  • Handle: RePEc:okl:wpaper:1403
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    References listed on IDEAS

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    More about this item

    Keywords

    Renewable portfolio standard; electricity price; synthetic control method;

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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