Speaker:

Steve Cicala - Assistant Professor, University of Chicago Harris School of Public Policy

Title:

Imperfect Markets versus Imperfect Regulation in U.S. Electricity Generation

Abstract:

This paper evaluates changes in electricity generation costs caused by the introduction of market mechanisms to allocate production in the United States. I use the staggered transition to markets from 1999-2012 to estimate the causal impact of liberalization using a differences-in-differences design on a comprehensive hourly panel of electricity demand, generators' costs, capacities, and output. I find that markets reduce production costs by 5% by reallocating production: Gains from trade across service areas increase by 55% based on a 25% increase in traded electricity, and costs from using uneconomical units fall 16%.

Speaker Bio:

Steve Cicala is an assistant professor at the University of Chicago Harris School of Public Policy and a Faculty Research Fellow at the National Bureau of Economic Research. His work focuses on the economics of regulation, particularly with respect to environmental and energy policy.

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