Skip to main content
SpringerLink
Log in

A cost-benefit assessment of wholesale electricity restructuring and competition in New England

  • Original Article
  • Published:
Journal of Regulatory Economics Aims and scope Submit manuscript

Abstract

We conduct a social cost-benefit analysis of wholesale electricity market restructuring and competition in New England. A counter-factual investment path is formulated which characterizes how the wholesale power system might have evolved in New England under continued regulation. The investment and operating costs of the counter-factual case are compared with a projected evolution of actual developments under restructuring and wholesale competition. An important contributor to restructuring benefits is improved operation of nuclear plants divested from incumbent owners under restructuring and transferred to more experienced owners. We estimate net benefits over the 18-year analysis period of about 2% of wholesale costs.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • California Energy Commission (2003). Comparative cost of California Central Station Electricity Generation Technologies Staff Report, Publication 100-03-001.

  • Douglas S. (2006). Measuring gains from regional dispatch: Coal-fired power plant utilization and market reforms. The Energy Journal, 27(1):119–138

    Google Scholar 

  • e-Acumen Advisory Services (2001) New England Peaking Resource Cost, December 10, 2001 available at http://www.iso-ne.com/special_studies/2001/

  • Energy Information Administration (October 2005). Short term energy outlook and winter fuels.

  • FERC (2004). Office of market oversight and investigations, State of the Markets Report.

  • FERC (1998). Decision in Champion International Corporation and Bucksport Energy, L.L.C. v. ISO-New England, Inc., New England Power Pool, and Central Maine Power Company, 85 F.E.R.C. 61142.

  • Gilbert R., Newbery D. (1994). The dynamic efficiency of regulatory constitutions. RAND Journal of Economics, 25(4):538–554

    Article  Google Scholar 

  • Global Energy Decisions (2005). Putting competitive markets to the test, July, 2005 available at http://www.globalenergy.com/competitivepower/competitivepower-full-version.pdf

  • Indiana Michigan Power Company dba American Electric Power, Integrated Resource Planning Report to the Indiana Utility Regulatory Commission, November 1, 2003.

  • ISO New England (2004). 2003 Annual markets report.

  • ISO New England (2005). 2004 Annual markets report.

  • ISO-NE (2003). NEPOOL (2003–2013). Forecast report of capacity energy loads and transmission, April 2003.

  • ISO-NE (2005). Draft Regional System Plan 2005, September 2, 2005.

  • Joskow P. (2006). Markets for power in the United States: An interim assessment. The Energy Journal, 27(1):1–36

    Google Scholar 

  • Lyon T. (1991). Regulation with 20-20 Hindsight: Heads I win, tails you lose?. RAND Journal of Economics, 22(4): 581–595

    Article  Google Scholar 

  • Markiewicz, K., Rose, N., & Wolfram, C. (2004). Has restructuring improved operating efficiency at US electricity generating plants. University of California Energy Institute CSEM WP 135 (July) available at http://www.ucei.berkeley.edu/PDF/csemwp135.pdf

  • Newbery D., Pollitt M. (1997). The restructuring and privatisation of Britain’s CEGB—was it worth it?. Journal of Industrial Economics, XLV(3):269–303

    Google Scholar 

  • PJM (2003). Market monitoring unit, State of the market report.

  • Reed, J. (2004). Testimony in FERC Docket No. ER03-563-030, August 31, 2004, Ex. ISO-8.

  • Synapse Energy Economics (2004). Electricity prices in PJM, available at http://www.pjm.com/documents/downloads/reports/synapse-report-pjm-electricityprices. pdf

  • Van Welie, G. (2005). ISO-NE, Joint board meeting on security constrained economic dispatch—Northeast Region Boston, MA, November 29, 2005, http://www.ferc.gov/EventCalendar/Files/20051128133136-Van%20Welie,%20ISO-NE.pdf

  • Zhang, F. (2005). Does electricity restructuring work? Evidence from the US Nuclear Energy Industry, available at http://www.ksg.harvard.edu/cbg/repsol_ypf-ksg_fellows/Papers/Zhang/

  • Zimmerman M. (1988). Regulatory treatment of abandoned property: Incentive effects and policy issues. Journal of Law and Economics, 31:127–44

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Analysis Group, Two Embarcadero Center, Suite 1750, San Francisco, CA, 94111, USA

    Matthew Barmack, Edward Kahn & Susan Tierney

Authors
  1. Matthew Barmack
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Edward Kahn
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Susan Tierney
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Edward Kahn.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Barmack, M., Kahn, E. & Tierney, S. A cost-benefit assessment of wholesale electricity restructuring and competition in New England. J Regul Econ 31, 151–184 (2007). https://doi.org/10.1007/s11149-006-9022-8

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11149-006-9022-8

Keywords

JEL Classifications

Search

Navigation