The political economy of electric utilities

Thesis/Dissertation · Tue Jan 01 04:00:00 EST 1991

OSTI ID:5953297

Oyefusi, O A

This dissertation analyzes the political and market forces that drive the production of electric power in the US. Production of electric power is a major input in the production of all capital and consumption goods in the US economy, and accounts for five percent of all US investment. Nevertheless, electric utilities account for a sizable share of the decline in US productivity growth since 1973. The worsening productivity in the electric utilities industry is due in part to the effects of political and regulatory factors. Utilities often react to regulation by sacrificing productive efficiencies to mitigate regulatory costs. A political-regulatory model is used to study a variety of rules and institutions that comprise the structure of regulatory commissions across states in the US and to explain how these structures influence utility performance. A market value which precedes this analysis of political and regulatory forces is developed using a system of simultaneous equations. This market model is then used to improve results of subsequent models which test the effects of political and regulatory variables. A broad nexus of regulatory practices are examined. For example: (i) do shorter or less staggered terms for sommissioners create a bias toward higher electricity prices (ii) does a restriction on post-commission employment deter favoritism (iii) do variations in share of regulatory commissions' budget received from a combination of general and specificfund revenues affect pricing decisions The main results of the analysis include the following: (i) when institutions controlling commissioner behavior are weak, the regulatory equilibrium will favor a mix of constituent, and not necessarily public, interests; (ii) the politics of regulaton differs when commissioners control only price, from when they control both price and taxes.

• Research Organization: George Mason Univ., Fairfax, VA (United States)
• OSTI ID: 5953297
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
296000* -- Energy Planning & Policy-- Electric Power
DEVELOPED COUNTRIES
ECONOMIC ANALYSIS
ECONOMICS
ELECTRIC POWER
ELECTRIC UTILITIES
INSTITUTIONAL FACTORS
MARKET
MATHEMATICAL MODELS
NORTH AMERICA
POLITICAL ASPECTS
POWER
POWER GENERATION
PRICES
PRODUCTIVITY
PUBLIC UTILITIES
REGULATIONS
USA