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Regional interfuel substitution by electric companies: The short-term prospects

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Abstract

This paper uses a translog price possibility frontier to measure the extent of regional interfuel substitution effects in the electric utility industry in the United States. Monthly data based on Department of Energy regions serve as the vehicle around which the estimation is performed. Given the nonlinear character of the price possibility frontier specification, an iterative Zellner seemingly unrelated regression technique is used for estimating the parameters of the model. The results suggest that relative changes in fuel prices have significant effects on fossil fuel consumption. This, in turn, has important implications for public policy. In particular, the market system appears better able to deal with exogenous shifts in energy supplies than has frequently been assumed in the formulation of energy policy toward the energy crisis.

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Authors
  1. Noel D. Uri
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Additional information

The author is an economist with the Department of Energy, Office of Conservation and Solar Applications. The views expressed are those of the author and do not necessarily represent the policies of the Department of Energy or the views of other Department of Energy staff members.

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Uri, N.D. Regional interfuel substitution by electric companies: The short-term prospects. Ann Reg Sci 12, 4–15 (1978). https://doi.org/10.1007/BF01286106

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