Efficiency and environmental impacts of electricity restructuring on coal-fired power plants

Hei Sing Chan, Harrison Fell, Ian Lange, Shanjun Li

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We investigate the efficiency and environmental impacts of electricity market restructuring by examining changes in fuel efficiency, cost of coal purchases, and utilization among coal-fired power plants based on a panel data set from 1991 to 2005. Our study focuses exclusively on coal-fired power plants and uses panel data covering several years after implementation of restructuring. The estimation compares how investor-owned (IOs) plants in states with restructuring changed their behavior relative to IOs in states without. Our analysis finds that restructuring led to: (1) a 1.4 percent improvement in fuel efficiency, (2) an 8 percent decrease in unit cost of heat input, and (3) a lower capacity factor even after adjusting for cross-plant generation re-allocation due to cost reductions. The estimates imply that restructuring has led to nearly 15 percent savings in operating expenses and up to 7.5 percent emissions reduction among these plants.

Original languageEnglish
Pages (from-to)1-18
Number of pages18
JournalJournal of Environmental Economics and Management
Early online date30 Aug 2016
Publication statusPublished - 1 Jan 2017


  • Electricity restructuring
  • Emissions
  • Firm behavior


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