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Pollution and the Price of Power

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  • Donald N Dewees

Abstract

Recent benefit-cost studies have shown that the marginal benefits from controlling conventional air emissions from coal-fired electric utility power plants in the US exceed marginal costs of pollution control. Moreover existing and proposed regulations ignore harm caused by the emission of greenhouse gases and harm caused in Canada. This means that electricity prices are too low wherever coal is the predominant fuel. However the same studies suggest that the mis-pricing of electricity is 4% or less. This paper will argue that in some regions of the US the wholesale price of electricity should be increased by up to 50%, if all externalities are to be included in the price. Getting the environmental price right could reduce pollution levels, increase energy conservation, and lead to wiser choices of new generation technology.

Suggested Citation

  • Donald N Dewees, 2006. "Pollution and the Price of Power," Working Papers tecipa-246, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-246
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    References listed on IDEAS

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    1. repec:aen:journl:1999v20-01-a04 is not listed on IDEAS
    2. Paul L. Joskow & Richard Schmalensee, 1988. "Markets for Power: An Analysis of Electrical Utility Deregulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262600188, December.
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    4. Palmer, Karen & Burtraw, Dallas, 2005. "Cost-effectiveness of renewable electricity policies," Energy Economics, Elsevier, vol. 27(6), pages 873-894, November.
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    Cited by:

    1. Li, Zhe, 2008. "Productivity Dispersion across Plants, Emission Abatement, and Environmental Policy," MPRA Paper 9564, University Library of Munich, Germany.
    2. Donald Dewees & Trevor Tombe, 2011. "The Impact of Sub-Metering on Condominium Electricity Demand," Canadian Public Policy, University of Toronto Press, vol. 37(4), pages 435-457, December.

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    More about this item

    Keywords

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    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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