Fuel inventory and price relationships in the U.S. electric power sector under regulatory and market change

Abstract

Long-run relationships among coal inventories at U.S. electric power plants, corporate bond rates and coal, natural gas, and electricity prices are estimated over the period July 1976 to October 2014. Tests for constancy of the long-run relationships show periods of instability which coincide with major regulatory events in the electric power sector. Deregulation of the natural gas and electricity markets are likely sources of instability for the period mid-1994 to mid-2001. Additionally, inventory behavior may have had a smoothing effect over instability caused by natural gas prices during the recent U.S. shale boom. Policy makers should be aware that altering the regulatory environment can result in considerable fluctuations in how firms' inventory decisions interact with input and output markets and opportunity costs in the long run.

Operational Efficiency Improvements in the Portuguese Electricity Sector

“…Some examples: although the 2002 unbundling reform in the Chinese electricity sector contributed to efficiency improvement (Ma and Zhao, 2015), there are still regulations on price and quantity that affect the efficiency of power plants (Sun and Wu, 2020); the U.S. electricity market restructuring imposed a negative effect on technical efficiency of utilities (Gultom, 2019); Australian distributors operate below efficient levels even after the deregulation that has been ongoing since 1998 (Lee et al, 2021); finally, efficiency in Pakistan's electricity market still suffers from multiple practical difficulties after reform (Mirza et al, 2021). Meanwhile, in some cases, deregulation may bring about instability in electricity markets (Binder and Mjelde, 2017), or result in efficiency loss due to mandated divestiture of generation assets or higher upstream transaction costs (Leung et al, 2019); environmental regulations may also affect efficiency in the energy sector (Hu et al, 2023). Barros (2008) applies DEA to find improvement in the technical efficiency of hydroelectric plants in Portugal between 2000 and2004. Nevertheless, it was only in 2006 that the new legislation defined the regime for electricity generation in the country.…”