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Electricity Price Regulation and the Use of Nuclear Power

Electricity Price Regulation and the Use of Nuclear Power

Full Title:  Electricity Price Regulation and the Use of Nuclear Power
Author(s):   Dan Karney
Publisher(s):   University of Illinois at Urbana-Champaign
Publication Date: October 1, 2012
Full Text: Download Resource
Description (excerpt):

This paper uses a new and unique dataset to identify the causal effect of marginal pricing in electricity markets on planned maintenance outages at U.S. nuclear generating units (NGUs) using reduced-form estimation. The new data are from the Power Reactor Status Reports (PRSRs) that collect a daily snapshot of a NGU’s operation including the reactor power level (0-100%) and identify planned maintenance outage periods. Using the PRSRs from 2001- 2008, the main regression specification finds that a one degree increase in the maximum daily temperature over 95 degrees (F) yields a 0.105 percentage point decrease in the daily probability of a NGU operating at less than 100% capacity, if the unit can sell electricity under a marginal pricing system (where temperature is used as a proxy for unobserved prices). The NGU can save production costs, as output-reducing maintenance is deferred to lower-demand periods.

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