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)
Davis, Lucas, and Catherine Hausman.
"Market Impacts of a Nuclear Power Plant Closure."
American Economic Journal: Applied Economics,
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Firm Performance: Size, Diversification, and Scope
Industry Studies: Utilities and Transportation: Government Policy
Alternative Energy Sources
Energy: Government Policy