Market Impacts of a Nuclear Power Plant Closure
- (pp. 92-122)
Abstract
Falling revenues and rising costs have put US nuclear plants in financial trouble, and some threaten to close. To understand the potential private and social consequences, we examine the abrupt closure of the San Onofre Nuclear Generating Station (SONGS) in 2012. Using a novel econometric approach, we show that the lost generation from SONGS was met largely by increased in-state natural gas generation. In the twelve months following the closure, natural gas generation costs increased by $350 million. The closure also created binding transmission constraints, causing short-run inefficiencies and potentially making it more profitable for certain plants to act noncompetitively. (JEL D24, L25, L94, L98, Q42, Q48)Citation
Davis, Lucas, and Catherine Hausman. 2016. "Market Impacts of a Nuclear Power Plant Closure." American Economic Journal: Applied Economics, 8 (2): 92-122. DOI: 10.1257/app.20140473Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L25 Firm Performance: Size, Diversification, and Scope
- L94 Electric Utilities
- L98 Industry Studies: Utilities and Transportation: Government Policy
- Q42 Alternative Energy Sources
- Q48 Energy: Government Policy
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