State-Level Electricity Generation Efficiency: Do Restructuring and Regulatory Institutions Matter in the US?

This paper examines the impact of deregulation and the political support for it on the electric power industry using a consistent state-level electricity generation dataset for the US contiguous states from 1997-2014. Recent analyses of productivity growth suggests that institutional factors are important and we wish to study the role of deregulation as a statelevel institutional change through two measures: (a) restructuring and (b) the political support for it, measured by the majority political affiliation of public utility commissions. We find evidence of positive impacts of deregulation (both restructuring and the political support for it) on technical efficiency across the models estimated. Our preferred model which allows for the control for deregulation variables on the mean and variance of the inefficiency shows an average technical efficiency of 73.1 percent. The results of the marginal effects reveal that the impact of deregulation including its political support on inefficiency is negative and monotonic, with the potential reduction of 8.4 percent in the mean of technical inefficiency, thereby suggesting a compelling evidence for generation efficiency improvement via deregulation

Cost efficiency and electricity market structure: A case study of OECD countries

The OECD electricity sector has witnessed significant institutional restructuring over the past three decades. As a consequence, many power generation utilities now act as unregulated companies that technically compete to sell power on an open market. This paper analyses the performance in term of cost efficiency for electricity generation in OECD power sector while accounting for the impact of electricity market structures. We employ the short-run cost function in which capital stock is treated as a quasi-fixed factor input. Empirical models are developed for the cost function as a translog form and analysed using panel data of 25 countries during the period 1980 to 2009. We show that it is necessary to model latent country-specific heterogeneity in addition to time-varying inefficiency. The estimated economies of scale are adjusted to take account of the importance of the quasi-fixed capital input in determining cost behaviour, and long run constant returns to scale are verified for the OECD generation sector. The research findings suggest there is a significant impact of electricity market regulatory indicators on cost. In particular, public ownership and vertical integration are found to have significant and sizable increasing impacts on cost, thereby indicating policy lessons on the desirable ways to implement structural electricity generation reforms

The supply and demand for electricity in Australia: a theoretical and empirical study for the years 1953 to 1971

© 1975 Dr. T. Weyman-JonesThis thesis considers some theoretical aspects of supply planning and undertakes empirical analyses of both demand and supply behaviour in the Australian electricity industry over the period 1953 to 1971. The research strategy reflects the way in which an economic adviser to an electricity authority might organize his work. The initial step is to spotlight three important areas for analysis: the link between demand and supply provided by cost and price signals; the planning of supply capacity to meet demand targets; and, finally, the forecasting and empirical analysis of demand. Part I of the thesis considers a traditionally important field of electricity economics - optimal pricing. Several tariff schemes suggested by economists and engineers are surveyed in conjunction with the reasoning behind them. Extensive tariff data, especially collected for the thesis, is then compared with reported costs (roughly in running and capital cost categories) to discover the extent to which theoretical tariff principles have been observable in practice. The empirical results suggest an imperfect use of theoretical tariff principles. This finding clearly prompts several questions: e.g. are there significant costs in non-optimal tariff formulation; is the peak loading problem sensitive in practice to tariff manipulation? The empirical studies carried out in Chapters IV and V suggest there are significant measurable costs of resource misallocation and that peaks in the load could well be significantly varied by tariff manipulation. Part II of the thesis is a detailed theoretical analysis of investment planning in electricity supply to meet specified demand targets at minimum total system cost in present worth terms. This analysis is set in the context of the celebrated model of Ralph Turvey (see bibliography); his principal models are examined and criticised; a survey of the background literature is given beginning with the classic article of Hotelling on depreciation. Subsequent chapters present a practical formulation of an electricity capacity planning problem for the Australian situation and a detailed survey and critique of the idea of "dynamic marginal cost". Part III of the thesis turns to the demand side. A thorough empirical study (using a variety of models of demand) is carried out for the residential sector and it suggests the usefulness of a model that simultaneously models the demand for the services of a stock of consumer durables and the demand for electricity as an input to the process of generating those services. Attention is also paid to traditional methods of measuring price elasticity of electricity demand. Finally, the industrial and commercial sectors come under scrutiny and the tariff data especially collected for the experiments reported in part I are used to test and compare conventional "average revenue" and the more theoretically correct "marginal price" methods for calculating price elasticity of demand. This concludes the study. A more detailed summary appears as Chapter XIV of the thesis

The effect of monetary policy on bank competition using the Boone index

An interesting strand of the theoretical literature on measuring competition posits that when competition increases in an industry, output is reallocated to more efficient firms. Our first contribution is on the methodology for the empirical implementation of this theoretical test of a change in competition. This contribution moves from the relationship between a change in competition and a single all-encompassing efficiency, to a set of relationships between a change in competition and multiple efficiencies that measure different components of economic performance. Our second contribution is to apply our empirical methodology to large U.S. banks. The results suggest that competition intensified between these banks during the financial crisis and beyond (2008 - 15), vis-à-vis our pre-crisis period (1994 - 07). This points to an increase in competition that has exogenous origins such as the decrease in the loan-deposit rate spread, which represented the collateral damage to banks from monetary policy to moderate the Great Recession

Efficiency and ownership in electricity distribution:A non-parametric model of the Turkish experience

The traditional structure of integrated monopoly in electricity supply is being abandoned and the general trend is towards privatization and deregulation. Turkey is no exception and has been deregulating its electricity market since 1984. Now, along side the publicly operated distribution organizations, there are four privately operated companies on the distribution side. This paper uses a non-parametric methodology to create a benchmark measure for the relative performance of the publicly operated organizations as well as the publicly operated organizations and their private counterparts. The early results show better technical and scale efficiency scores for the privately operated distribution organizations. However, this does not necessarily imply the success of private ownership in electricity distribution, since there are also technically and scale efficient publicly operated distribution organizations. This article therefore concentrates on finding the sources of inefficiencies by analysis of data and market structure, and discusses these in the context of the Turkish electricity market

Third parties’ participation in tradable permits market. Do we need them?

This paper analyses the behaviour, influence and role of third parties in tradable permits markets. Following the literature, it focuses on a framework in order to understand how society and third parties react against the firms’ emissions due to their participation in the tradable permits market. Therefore the paper reveals the tradable permits mechanism as a new way for public direct action and highlights the possible benefits for the regulator. An important part of the third parties consists of the very active participation of the Environmental Non-Governmental Organisations. Therefore, this paper argues that the third party’s participation and specifically the environmental groups’ participation in tradable permits market could drive the market to the optimum equilibrium. In order to examine this proposition we use some data from the first phase of the permits market in European Union and some available data for the environmental groups’ income. We conclude that the environmental groups could purchase the exceeded, over-allocated permits and could drive the market in the equilibrium point. Finally, for the regulator the environmental groups participation could be desirable given that they could improve the efficiency of the tradable permits market.

Liberalisation, Privatisation and the Productivity of Egyptian banks: a non-parametric approach

This paper evaluates the performance of Egyptian banks during a period characterised by changes in economic policies. The Egyptian government's liberalisation policies in the early 1990s have had a positive or negative impact on the performance of the Egyptian banks. In addition, whether the liberalisation impact has influenced different forms of banks' ownership and sizes with consistent magnitude is examined. Another objective of this paper is to examine the impact of the privatisation process at the end of 1995 on the efficiency and productivity performance of the overall banking sector and on joint-venture banks in particular. The data envelopment analysis Malmquist methodology is employed to estimate the productivity of Egyptian banks