Publications

    Alliance, The New England Energy. “A Review of Electricity Industry Restructuring in New England.” In, 2006.Abstract

    Excerpt from the Introduction:

     

    The New England states were among the first in the nation to restructure wholesale and retail electricity markets beginning in the late 1990s. In large part, the action was prompted by the burden of having the highest electricity costs in the country, which created hardships for residential consumers and handicapped many businesses from competing on a “level playing field” with companies located outside the region.2 Restructuring required most electric utilities to: sell their generating plants, allow consumers to choose among electricity suppliers and procure electricity for those consumers not choosing an electricity supplier – while remaining regulated and responsible for local distribution service. Wholesale restructuring involved creating a fair and reliable market for competition in generating electricity while ensuring equal access to transmission grids. Once established, the wholesale market caused electricity to become a commodity with prices set not by regulators, but by market rules and the balance between supply and demand.

    Shanefelter, Jennifer Kaiser. “Restructuring, Ownership and Efficiency: The Case of Labor in Electricity Generation.” In, 2006. Publisher's VersionAbstract
    This analysis considers improvements in productive efficiency that can result from a movement from a regulated framework to one that allows for market-based incentives for industry participants. Specifically, I look at the case of restructuring in the electricity generation industry. As numerous industries and economies have undergone this sort of transition to varying degrees, it is instructive to assess the performance of market-based incentives relative to what was observed under tighter regulation. Using data from the electricity industry, this analysis considers the total effect of restructuring on one input to the production process – labor – as reflected in employment levels, payroll per employee and aggregate establishment payroll. Using concurrent payroll and employment data from non-utility ("merchant") and utility generators in both restructured and nonrestructured states, I estimate the effect of market liberalization, comprising both new entry and state-level legislation, on employment and payroll in this industry. I find that merchant owners of divested generation assets employ significantly fewer people, but that the payroll per employee is not significantly different from what workers at utility-owned plants are paid. As a result, the new merchant owners of these plants have significantly lower aggregate payroll expenses. Decomposing the effect into a merchant effect and a divestiture effect, I find that merchant ownership is the primary driver of these results.
    Joskow, Paul, and Jean Tirole. “Retail Electricity Competition.” In, 2005. Publisher's VersionAbstract

    We analyze a number of unstudied aspects of retail electricity competition. We first explore the implications of load profiling of consumers whose traditional meters do not allow for measurement of their real time consumption, when consumers are homogeneous up to a scaling factor. In general, the combination of retail competition and load profiling does not yield the second best prices given the non price responsiveness of consumers. Specifically, the competitive equilibrium does not support the Ramsey two-part tariff. By contrast, when consumers have real time meters and are billed based on real time prices and consumption, retail competition yields the Ramsey prices even when consumers can only partially respond to variations in real time prices. More complex consumer heterogeneity does not lead to adverse se1ection and competitive screening behavior unless consumers have real time meters and are not rational. We then examine the incentives competitive retailers have to install one of two types of advanced metering equipment. Competing retailers overinvest in real time meters compared to the Ramsey optimum, but the investment incentives are constrained optimal given load-profiling and retail competition. Finally, we consider the effects of physical limitations on the ability of system operators to cut off individual customers. Competing retailers have no incentive to determine the aggregate value of non-interruption of consumers in the zones they serve, preferring instead to free ride on other retailers serving consumers in the same zones. 

     

    Bessembinder, Hendrik, and Michael Lemmon. “Gains From Trade Under Uncertainty: The Case of Electric Power Markets.” In, 2004.Abstract

    The rapid growth in energy trading and movement towards deregulation of electricity markets have come to a halt in the wake of assertions that western U.S. energy markets were manipulated. This paper refocuses attention on the potential efficiency gains from competitive wholesale power trading, showing that for any given level of average demand, retail electricity prices will be lower if electricity is traded in competitive wholesale markets than if electricity is delivered by integrated producer-retailers. Wholesale power trading allows for the diversification of demand risk, and the greatest efficiency gains accrue when power demand is least correlated across markets and when there is substantial geographic variation in expected demand. Simulation evidence indicates that real time power trading could reduce retail prices by conservative estimates of 3 to 4% on average in the U.S., and that the combination of forward and real time trading could reduce prices by 6 to 10% or more. This analysis indicates that economic efficiency would be best served by policy aimed at ensuring that power markets are indeed competitive, and that sufficient transmission capacity exists for profitable power trades to be completed.

    Bradford, Peter. “Testimony Before the United States Senate Committee on Environment and Public Works Subcommittee on Transportation, Infrastructure and Nuclear Safety - Renewal of the Price Anderson Act.” In, 2002.Abstract
    Bradford, Peter (Regulatory Assistance Project). Testimony Before the United States Senate Committee on Environment and Public Works Subcommittee on Transportation, Infrastructure and Nuclear Safety - Renewal of the Price Anderson Act. 23 January 2002. Testimony, analysis, 4 pages.