Affiliation:
1. Haas School of Business, University of California, Berkeley, CA 94720 and National Bureau of Economic Research (NBER) (e-mail: )
2. Ford School of Public Policy, 735 South State Street, University of Michigan, Ann Arbor, MI 48109 and NBER (e-mail: )
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)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Cited by
62 articles.
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