Facebook LinkedIn Twitter

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

The Performance of the U.S. Market for Independent Electricity Generation

We examine recent evidence on the economic performance of the U.S. independent electricity generation market. A sample of power purchase contracts for 26 independent power facilities is used as the basis of this assessment. The contracts were executed in various years between 1987-94. We describe qualitative features of the contracts, including dispatchability and allocation of fuel price risk. We standardize the price formulas of the contract sample and conduct a simple statistical analysis. Because of residual price variation and an indication that buyer willingness-to-pay is highly correlated with price, we conclude that bulk power sold by independent power producers is a heterogeneous product, and evidence for competition in market prices is weak.

Purchase ( $25 )

Energy Specializations: Energy Investment and Finance – Corporate Strategy; Electricity – Markets and Prices ; Electricity – Policy and Regulation

JEL Codes:
D92 - Intertemporal Firm Choice: Investment, Capacity, and Financing
D42 - Market Structure, Pricing, and Design: Monopoly
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Independent power producers, electricity prices, electricity industry, competition, deregulation, performance

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No3-2

Published in Volume17, Number 3 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.