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Two Essays On Electricity Markets
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Book Synopsis Two Essays on Electricity Markets by : Rodrigo Menon Simoes Moita
Download or read book Two Essays on Electricity Markets written by Rodrigo Menon Simoes Moita and published by . This book was released on 2006 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation is about the electricity industry and the problems that arise with the liberalization and de-regulation of the industry. Characteristics intrinsic to the electricity market create problems that can compromise an efficient functioning of this market. Each of the two chapters of this dissertation focus on a specific aspect of this industry.
Book Synopsis Two Essays on Problems of Deregulated Electricity Markets by : Dmitri Perekhodtsev
Download or read book Two Essays on Problems of Deregulated Electricity Markets written by Dmitri Perekhodtsev and published by . This book was released on 2004 with total page 99 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Electricity and Matching Markets by : Ömer Karaduman
Download or read book Essays on Electricity and Matching Markets written by Ömer Karaduman and published by . This book was released on 2020 with total page 228 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis contains two chapters on the Electricity Markets and a chapter on Matching Markets. In the first chapter, I study how an energy storage affects the wholesale electricity market. The transition to a low-carbon electricity system is likely to require grid-scale energy storage to smooth the variability and intermittency of renewable energy. I investigate whether private incentives for operating and investing in grid-scale energy storage are optimal and the need for policies that complement investments in renewables with encouraging energy storage. In a wholesale electricity market, energy storage systems generate profit by arbitraging inter-temporal electricity price differences. In addition, storage induces non-pecuniary externalities due to production efficiency and carbon emissions. I build a new dynamic equilibrium framework to quantify the effects of grid-scale energy storage and apply it to study the South Australian Electricity Market. This equilibrium framework computes a supply function equilibrium using estimated best responses from conventional sources to observed variation in the residual demand volatility. Accounting for storage’s effect on equilibrium prices is quantitatively important: previous methods that ignore this channel overestimate the profitability of operating a storage unit. The first set of results shows that although entering the electricity market is not profitable for privately operated storage, such entry would increase consumer surplus and total welfare and reduce emissions. A storage operator that minimizes the cost of acquiring electricity could further improve consumer surplus by twice as much. Importantly, a competitive storage market cannot achieve this outcome because other power plants distort prices. These results argue for a capacity market to compensate for a private firm for investing in storage. The second set of results shows that at moderate levels of renewable power, introducing grid-scale storage to the system reduces renewable generators’ revenue by decreasing average prices. For high levels of renewable generation capacity, storage increases the return to renewable production and decreases CO2 emissions by preventing curtailment during low-demand periods. In the second chapter, I study how a large scale wind power investment affects the wholesale electricity market. Renewable subsidies have been an influential device for wind power investment in many parts of the world. These policies help to lower emissions by offsetting high-emitting electricity generation with clean energy. For zero-emission targets, this transition towards renewable power should be accompanied by thermal generators’ retirement to set clean the energy mix in the power sector. In this paper, I build a framework to quantify the offset and revenue impact of large-scale wind power investment in a wholesale electricity market and apply it to study the South Australian Electricity Market. This equilibrium framework computes a supply function equilibrium using estimated best responses from conventional sources to observed variation in the residual demand volatility. I first show that reduced-form methods are biased as the scale of the additional capacity increases. My results highlight that with different investment sizes, the substitution patterns and negative revenue impact for wind power differ considerably. As the penetration level of wind power increases, the electricity becomes cheaper. The offset and negative shock shifts from low-cost inflexible generators to high-cost flexible generators, while the revenue impact is the highest on existing renewable generation. I also show quite a bit heterogeneity in price impact among different potential wind power projects. These results have some policy implications on renewable targets’ long-run effects and the project selection given the subsidy scheme. In the third chapter, joint with Nikhil Agarwal, Itai Ashlagi, Eduardo Azevedo and Clayton Featherstone, I study the market failure in kidney exchange. We show that kidney exchange markets suffer from market failures whose remedy could increase transplants by 30 to 63 percent. First, we document that the market is fragmented and inefficient; most transplants are arranged by hospitals instead of national platforms. Second, we propose a model to show two sources of inefficiency: hospitals only partly internalize their patientsâǍŹ benefits from exchange, and current platforms suboptimally reward hospitals for submitting patients and donors. Third, we calibrate a production function and show that individual hospitals operate below efficient scale. Eliminating this inefficiency requires either a mandate or a combination of new mechanisms and reimbursement reforms.
Book Synopsis Essays on Electricity Markets by : Linda Rud
Download or read book Essays on Electricity Markets written by Linda Rud and published by . This book was released on 2009 with total page 287 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Electricity Markets by : Mahdi Chahkandi
Download or read book Essays on Electricity Markets written by Mahdi Chahkandi and published by . This book was released on 2020 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: Debates about the utility death spiral have gained momentum as the increasing adoption of distributed generation (DG) during the past decade is threatening the traditional business model of electric utilities. Since most jurisdictions have implemented policies that encourage adoption of DG, it seems that the best approach for utilities to deal with the issue of the utility death spiral is to incorporate DG into their business models. In this dissertation, I analyze two policies that can resolve the death spiral problem. The first policy involves levying an option charge on consumers for the right to use the grid when their DG devices are not generating enough electricity. The other policy involves using smart meters to charge retail consumers different per unit prices in different demand periods. My theoretical results show that these two policies can resolve the death spiral problem and my simulation results confirm that the option charge and variable pricing indeed resolve a death spiral situation that I simulate for the case of California. The option charge, however, outperforms the variable pricing policy in terms of increasing consumer welfare.
Book Synopsis Essays in Electricity Economics by : Brittany L. Tarufelli
Download or read book Essays in Electricity Economics written by Brittany L. Tarufelli and published by . This book was released on 2019 with total page 188 pages. Available in PDF, EPUB and Kindle. Book excerpt: Goods markets are designed and regulated at a sub-global level. Although it’s typical to assume one set of market clearing rules across regulated and unregulated regions, trade occurs across a patchwork of sub-global market designs. Not accounting for this heterogeneity in market design can lead to unanticipated outcomes from sub-global regulations, as correcting for one market failure–such as a negative externality from carbon emissions–can lead to another market failure from the market design itself when trade occurs across differing market designs. The anatomy of this second-best problem is considered in the context of U.S. electricity markets, as market clearing mechanisms vary by region, and they imperfectly overlap with state-level climate policies such as carbon prices and renewables subsidies. In Chapter I, I present a review of the theoretical and empirical literature on electricity market design and its interaction with regional climate policies. In the wholesale electricity sector, market design drives both the extent of the forward contract market and the competitiveness of the spot market, which can induce strategic behavior and affect both market and regional climate policy outcomes. Assessing climate policy outcomes under only the assumption of a centralized market design, as is customary in the literature, belies the complexity of electricity market design, which varies regionally. As there is currently an agenda to link regional electricity markets, there is also a need to study how strategic behavior across differing market designs affects emissions when regional climate policies are imposed. In Chapter II, I develop a two-stage model of oligopolistic electricity production to determine if strategic behavior in forward contract and spot markets across differing electricity market designs increases or decreases emissions leakage from regional climate policies. I find that under uncertainty from demand and renewable resource shocks, centralized market designs generally reduce market power through arbitraging away price risk between forward and spot markets. However, under an asymmetric carbon cap and trade program, resulting emissions leakage is decreased by bilateral markets, which act as a structural backstop to emissions leakage. Emissions leakage increases when bilateral markets trade with, or are integrated with centralized markets, potentially reducing the efficacy of regional climate policies. In Chapter III, I study the interaction between sub-global climate policy and sub-global design of goods markets using an example of market expansion from wholesale electricity markets–the Western Energy Imbalance Market (EIM) in California. Using a difference-in-differences and triple-differences framework with matching to account for self-selection, I investigate how the EIM affects emissions leakage from California’s carbon cap and trade program. I find that the EIM caused a modest increase in emissions leakage into participating regions outside California, despite the relatively small trading volumes. The results have implications for ongoing efforts to expand competitive wholesale electricity markets across regions with differing climate policies. The results of this dissertation are informative for sub-global climate policy when trade in goods markets occurs across regions with different market clearing rules. Specifically, reduced transactions costs in trade between regulated and unregulated regions may tend to exacerbate emissions leakage. These results are informative in the context of continuing changes in wholesale electricity markets, including potential market expansions and continued integration of regional electricity markets across the U.S. and the European Union.
Download or read book Essays on Electricity Markets written by and published by . This book was released on 2014 with total page 159 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Evolution of Global Electricity Markets by : Fereidoon Sioshansi
Download or read book Evolution of Global Electricity Markets written by Fereidoon Sioshansi and published by Academic Press. This book was released on 2013-06-10 with total page 867 pages. Available in PDF, EPUB and Kindle. Book excerpt: Get the latest on rapidly evolving global electricity markets direct from the scholars andthought leaders who are shaping reform. In this volume, dozens of world-class expertsfrom diverse regions provide a comprehensive assessment of the relevant issues intoday’s electricity markets. Amid a seething backdrop of rising energy prices, concerns about environmentaldegradation, and the introduction of distributed sources and smart grids, increasinglystringent demands are being placed on the electric power sector to provide a morereliable, efficient delivery infrastructure, and more rational, cost-reflective prices. Thisbook maps out the electric industry’s new paradigms, challenges and approaches,providing invaluable global perspective on this host of new and pressing issues beinginvestigated by research institutions worldwide. Companies engaged in the powersector’s extensive value chain including utilities, generation, transmission & distributioncompanies, retailers, suppliers, regulators, market designers, and the investment &financial rating community will benefit from gaining a more nuanced understanding ofthe impacts of key market design and restructuring choices. How can problems beavoided? Why do some restructured markets appear to function better than others?Which technological implementations represent the best investments? Whichregulatory mechanisms will best support these new technologies? What lessons canbe learned from experiences in Norway, Australia, Texas, or the U.K.? Thesequestions and many more are undertaken by the brightest minds in the industry in thisone comprehensive, cutting-edge resource. Features a unique global perspective from more than 40 recognized experts and scholars around the world, offering opportunities to compare and contrast a wide range of market structures Analyzes how the implementation of existing and developing market designs impacts real-world issues such as pricing and reliability Explains the latest thinking on timely issues such as current market reform proposals, restructuring, liberalization, privatization, capacity and energy markets, distributed and renewable energy integration, competitive generation and retail markets, and disaggregated vs. vertically integrated systems
Book Synopsis Three Essays on Empirical Analysis of United States Electricity Markets by : Suman Gautam
Download or read book Three Essays on Empirical Analysis of United States Electricity Markets written by Suman Gautam and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this Dissertation, three independent studies analyze the impact of recent changes in both supply and demand sides of the U.S. electricity sector. Below is a brief description of three essays. I. Coal Plant's Response to Renewable Portfolio StandardsRenewable Portfolio standards require load-serving entities to purchase a given percentage of their electricity sales from eligible renewable energy technologies. This study analyzes the impact of RPS on the coal utilization by coal plants of Pennsylvania, New Jersey, and Maryland (PJM) electricity market. We develop a panel dataset of 259 unique PJM coal-fired utility plants' integrating their fuel purchases with state-level RPS energy mandates, electricity prices, and fuel prices from 2001 to 2011, covering both pre-RPS and post-RPS era. Since selection of RPS policies may be non-random, we employ a two-step Heckit model to control for states' decision to adopt an RPS and choose yearly RPS levels. The results show that a percentage point increase in state's yearly energy target increases the average plant's coal purchase by 45 thousand tons. These results are approximately consistent across selection-corrected models. The analysis showing the positive impact of RPS yearly targets on PJM coal plants' coal purchases suggests a few things. There are fewer coal plants operating at the margin. Moreover, RPS yearly energy targets are fairly low at present; they are scheduled to increase considerably in coming years. Renewable Portfolio Standards may decrease the amount of fuel utilized by coal plants when RPS mandates increase in future. II. Residential Customers Response to Critical Peak Events of Electricity: Green Mountain Power ExperienceDemand response (DR) programs, usually through peak pricing and incentive-based approaches, can encourage customers to reduce or shift consumption during peak periods. This benefits utilities by lowering short-run generation costs and reducing the need for some long-run peak-driven investments. This paper analyzes the impact of Vermont's Green Mountain Power's (GMP) emergency DR programs on residential customers' electricity consumption during a two-year pilot study program in 2012--2013. The 3,735 single-home residents of Central Vermont area were separated into six treatment groups and two control groups resulting into 26 million hourly load observations during the period of the study. Our analysis shows that incentive-based demand response programs have statistically significant impacts on reducing peak load. Specifically, CPR rates reduced peak load usage 6% to 7.7% and CPP rates reduced peak load between 6.8% and 10.3% during critical peak events. Moreover, on average, IHD-equipped participants' monthly energy consumption was 2.0% to 5.3% lower than the monthly energy usage of non-IHD customers. However, none of the CP rate and IHD treatments induced a persistent response across multiple critical events and none of the treatment groups exhibited a consistent response to critical peak events. Based on our evaluation of GMP's DR programs during 2012 and 2013, neither critical peak pricing nor rebates are themselves sufficient to substitute for new capacity to meet resource adequacy requirements.III. Analysis of Load and Price patterns in the U.S. Electricity SectorThe study analyzes hourly electricity loads and marginal costs of electric entities with of extreme value theory (EVT), a concept widely used in the financial sector. For each year's hourly data of balancing authorities and utilities, we fit generalized extreme value (GEV) distribution and estimate the parameters of the distribution with an aim of comparing how these parameters have changed over time and market regions. We also account for the time dependencies, seasonalities, and near-time clustering present in the electricity markets -- both for electricity load and prices -- with the help of autoregressive conditional hetereskedastic models. The results show that the distributions of hourly load and lambda values are fat tailed. Hourly lambda values have more extreme values generating fatter tails than hourly electricity load. We also show that extreme tail quantiles estimated with the GEV parameters at different percentile levels are comparable with the percentiles of actual observations.
Book Synopsis Essays on Competition in Electricity Markets by : Ricardo Javier Bustos Salvagno
Download or read book Essays on Competition in Electricity Markets written by Ricardo Javier Bustos Salvagno and published by . This book was released on 2012 with total page 322 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter two examines the Chilean experience on auctions for long-term supply contracts in electricity markets from 2006 to 2011. Using a divisible-good auction model, I provide a theoretical framework that explains bidding behavior in terms of expected spot prices and contracting positions. The model is extended to include potential strategic behavior on contracting decisions. Empirical estimations confirm the main determinants of bidding behavior and show heterogeneity in the marginal cost of over-contracting depending on size and incumbency.
Book Synopsis Essays on Intermittent Renewable Integration in Electricity Market Design by : Cody Hohl
Download or read book Essays on Intermittent Renewable Integration in Electricity Market Design written by Cody Hohl and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation explores the impact of intermittent renewable integration in electricity market design. U.S. electricity markets adopt a two-settlement structure with day-ahead and real-time markets. Wind power integration poses a challenge for this market structure because day-ahead wind production forecasts are uncertain and significant rescheduling costs may occur in real time, increasing the need for out-of-market uplift payments. Chapters 2 and 3 investigate whether a multi-settlement structure, where participants can re-trade their forward positions in multiple intraday stages between the day-ahead and real-time markets, reduces uplift payments and system costs, relative to a two-settlement structure. Chapter 2 implements unit commitment and dispatch models that account for intertemporal constraints and are solved on a 36-node test system using historical wind forecasts provided by a Regional Transmission Organization (RTO), as well as synthetic wind forecasts reproducing the observed correlation in the historical data. The performance of market designs are compared across varying levels of wind penetration, where it is found that transitioning from the current two-settlement design to the proposed multi-settlement design may not improve efficiency in power system operations, and RTOs should not use their own forecasts to represent wind power generation for unit commitment and dispatch decisions. Chapter 3 develops laboratory experiments for the two-settlement and multi-settlement structures, where participants play the role of electricity generating companies who sell electricity into the market through a uniform price auction. Unit commitment and dispatch models are used to clear the market and compare the performance of both market designs under varying levels of wind penetration. Results show there is no significant difference in the performance of each market design due to participants not following their wind forecast signals. Chapter 4 examines resource adequacy and revenue sufficiency under two market designs and increasing levels of wind penetration. A capacity market structure provides an incentive for electricity suppliers to invest in new capacity through payments determined in a centralized capacity auction, while an energy-only market structure provides an incentive for electricity suppliers to invest in new capacity through high energy price caps and an operating reserve demand curve (ORDC) price adder mechanism. Equilibrium and mixed integer models are formulated to compare market performance under natural gas price, wind forecast, and demand uncertainty. Results from both market structures are evaluated on a test system comprised of seven nodes, six generators, and ten transmission lines, and show that only modern natural gas generating technologies have incentive to invest in new capacity.
Book Synopsis Essays in Energy and Environmental Markets by : Mar Reguant-Rido
Download or read book Essays in Energy and Environmental Markets written by Mar Reguant-Rido and published by . This book was released on 2011 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, I explore issues related to energy and environmental markets. In the first chapter, I examine the benefits of complementary bidding mechanisms used in electricity auctions. I develop a model of complex bidding and estimate its structural parameters in the context of the Spanish electricity market. I then perform a counterfactual analysis in which the original mechanism is compared to one in which complex bids are not allowed. I find that, while firms do exercise market power through complex bids, the positive coordination benefits of complex bidding dominate. In the second chapter, I explore the impacts of cap-and-trade in the Spanish electricity market, quantifying the rate at which firms internalized the costs of the emissions as well as the rate at which they passed it through. I find evidence that supports a full internalization rate at the firm-level, which results in a partial pass-through due to both demand and supply factors. Finally, in chapter 3, in joint work with Meredith Fowlie and Stephen Ryan, we explore the long run dynamic implications of subjecting an imperfectly competitive industry to market-based pollution regulation. Using two decades of panel data on the US Portland cement industry, we estimate a fully dynamic model of firms' strategic entry, exit, production, and investment decisions. We then use the model to simulate counterfactual outcomes under three general classes of allocation regimes: auctioning, grandfathering, and contingent updating. We find that the imposition of a carbon trading program would lead to large social losses at low to medium carbon prices.
Book Synopsis Three Essays on "making" Electric Power Markets by : Brian Thomas Kench
Download or read book Three Essays on "making" Electric Power Markets written by Brian Thomas Kench and published by . This book was released on 2000 with total page 434 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Environmental Regulations in Electricity Markets by : Yanming Sun
Download or read book Essays on Environmental Regulations in Electricity Markets written by Yanming Sun and published by . This book was released on 2013 with total page 102 pages. Available in PDF, EPUB and Kindle. Book excerpt: Reducing the Greenhouse Gas pollution and promoting energy efficiency among consumers' energy use have been major public policy issues recently. Currently, both the United States and the European Union have set up explicit percentage requirements that require energy generators or consumers to undertake a certain percentage of their energy production or consumption from renewable sources. To achieve their renewable targets, the Tradable Green Certificates (TGC) system has been introduced in their electricity markets. Moreover, in order to promote energy conservation and achieve energy efficiency targets, price policies and price changes derived from environmental regulations have played a more important role in reducing electricity consumption. My research studies problems associated with these policy implementations. In Chapter 1, I analyze a competitive electricity market with two countries operated under a common TGC system. By using geometric illustrations, I compare the two countries' welfare when the renewable quota is chosen optimally under the common certificate market with three different situations. The policy recommendation is that when the value of damage parameter is sufficiently small, full integration with a TGC market is welfare superior to full integration of an all fossil-fuel based market with an optimal emissions standard. In Chapter 2, by analyzing a stylized theoretical model and numerical examples, I investigate the performance of the optimal renewables policy under full separation and full integration scenarios for two countries' electricity markets operated under TGC systems. In my third chapter, I look at residential electricity consumption responsiveness to increases of electricity price in the U.S. and the different effect of a price increase on electricity use for states of different income levels. My analysis reveals that raising the energy price in the short run will not give consumers much incentive to adjust their appliances and make energy conservation investments to reduce electricity use, while in the long run, consumers are more likely to lower their electricity consumption, facing the higher electricity price induced from regulation policies. In addition, for states of higher per capita GDP, raising the electricity price may be more effective to ensure a cut in electricity consumption.
Book Synopsis Three Essays on European Electricity Markets by : Olga Spiridonova
Download or read book Three Essays on European Electricity Markets written by Olga Spiridonova and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on the Incentive for Generation Investment in Deregulated Electricity Markets by : Yun Liu
Download or read book Three Essays on the Incentive for Generation Investment in Deregulated Electricity Markets written by Yun Liu and published by . This book was released on 2016 with total page 139 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis is a collection of three essays discussing the incentive for generation investment in deregulated electricity markets in Texas and California. Essay one: Ex post payoffs of a tolling agreement for natural-gas-fired generation in Texas. To explore the problem of insufficient investment incentive for natural-gas-fired generation in Electricity Reliability Council of Texas (ERCOT), I use a large sample of over 134,000 15-minute observations in the 46-month period of 01/01/2011 – 10/31/2014 to estimate the effects of several fundamental drivers on the ex post payoffs of three hypothetical tolling agreements by heat rate. Our assumed heat rates reflect those of a new combined cycle gas turbine (CCGT), a new combustion turbine (CT) and an old CT. The fundamental drivers are postulated to be the natural-gas price, regional loads, nuclear generation, and wind generation. We find rising natural-gas price and non-West regional loads tend to increase the agreements’ ex post payoffs. These payoff increases, however, were reduced by rising West regional load, nuclear generation and wind generation. Finally, we find a substantial payoff decline due to large-scale wind generation development in Texas, lending support to the suggestion of ERCOT’s transition from an energy-only market to an energy-and-capacity market. Essay two: Wind generation’s effect on the ex post variable profit of compressed air energy storage: Evidence from Texas. We use 1401 daily observations in the 46-month period of 01/01/2011 – 10/31/2014 to estimate wind generation’s effect on the daily per MWH arbitrage profits of compressed air energy storage (CAES) in the four regions of Houston, North, South, and West in the Electricity Reliability Council of Texas (ERCOT). We find an increase in wind generation’s MWH output in the discharge hours tends to reduce a CAES system’s profits. The same MWH increase in the charge hours, however, tends to increase profits. Hence, a wind generation capacity expansion that increases wind MWH in both discharge and charge hours has offsetting profit effects, implying that a CAES unit’s profitability is unlikely affected by wind generation development. Sharply contrasting the “gone with the wind” profitability problem faced by natural-gas-fired generation, our findings lend support to the financial attractiveness of CAES, whose development is useful for integrating a rising share of wind generation capacity into an electric grid. Essay three: Renewable generation’s impact on pumped hydro storage’s profitability in California. We use a sample of 860 daily observations over the 28-month period of 12/12/2012 – 04/30/2015 to estimate the effect of renewable generation development on pumped hydro storage’s (PHS’s) profitability in California. We find that rising renewable generation does not significantly (a = 0.01) diminish a PHS system’s daily operating profits from energy sales at the California Independent System Operator’s (CAISO’s) day-head and real-time market prices, chiefly because renewable generation’s merit-order effect on the market prices cuts the system’s output revenue in a discharge period and input cost in a charge period. The system, however, faces severely inadequate investment incentive because its annual operating profit can hardly pay for its annual fixed cost. Hence, California should continue its adopted procurement process for long-term contracts with adequate fixed cost recovery, so as to promote PHS to reliably integrate increasing amount of renewable generation into the state’s electric grid.
Book Synopsis Essays on the U.S. Electricity Sector by : Jin Soo Han
Download or read book Essays on the U.S. Electricity Sector written by Jin Soo Han and published by . This book was released on 2017 with total page 198 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of two essays on the U.S. electricity sector.The first essay studies the impact of electricity market deregulation on a firm's fuel procurement costs. I find that deregulated coal-fired power plants achieve about 6% cost reduction, half of what literature has claimed. Furthermore, when the Acid Rain Program, environmental regulation on sulfur dioxide, induces deregulated plants to disproportionately switch to cleaner and cheaper sub-bituminous coal, it is challenging to identify what cost reductions would have been absent the environmental regulation. I estimate 3% as the lower bound effect of deregulation. Despite the small effect on average, plants exhibit heterogenous reponses to deregulation. When plants procure coal via bilateral contracts, an amount of cost reductions a plant can attain depends on its incentive and ability to negotiate. I find that deregulated plants with unfavorable contracts and bigger production capacity achieve substantial cost reductions; 18% and 9%, respectively. The second essay studies the impact of power company mergers on fuel sourcing decisions. Specifically, I study whether coal-fired power plants consolidate their supplier base upon a merger. I find that a pair of two merging plants becomes 23% more likely to source from common suppliers. Plant pairs also increase their dependence on the common suppliers. I find that a fraction of total coal delivery from the common suppliers increases by 47% upon a merger.
