Essays on the investment behavior of independent power producers in the United States electricity industry under regulatory restructuring.

摘要

In recent years, there have been efforts at both the federal and state level to introduce greater competition and markets into the US electricity industry through regulatory restructuring. A key to the success of such efforts is the ability of the restructuring to attract investment from non-utility, independent power producers (IPPs). The two essays in this dissertation examine empirically the investment behavior of IPPs under the regulatory restructuring between 1996 and 2000. In both essays, the effects of restructuring on a firm's investment decision are decomposed into the effects that work through the investment cost and that through the expected profit from the investment. The first essay studies the entry behavior of IPPs under the restructuring. The main finding of the essay is that the restructuring has done little to lower the entry barrier faced by IPPs-high fixed cost to entry is still a main factor that hinders IPP investment. The second essay studies IPPs' decisions between investing through building new power plants (“make”) and investing through acquiring divested plants (“buy”). It finds that the availability of the “buy” option does not “squeeze” out investment on new capacities. IPPs that chose to “buy” did so because they expected a lower return from “make” and hence would not have switched their investment to new capacities even if the “buy” option were not available. Therefore, divestiture is a viable policy tool for state regulators to attract more IPP investment.