AbstractsPhysics

In 1996, the Federal Energy Regulatory Commission (FERC) deregulated the electric power industry by issuing Order 888. Since the issuance of order 888, the industry has been characterized by a hybrid regulatory structure divided around whether a particular utility receives franchised rates for electric service guaranteed by state public utility commissions. This split runs almost directly down the middle of the industry. In June 2005, 57% of installed capacity in the United States was subject to rate regulation, while 43% was unregulated (Global Energy Decisions, Energy Velocity Database, 2006, hereafter EV). At the same time, greenhouse gas (GHG) emissions from electricity generation have been increasing. CO2 emissions from the US electricity sector increased by almost 40 million tons from 2002-2005 (Department of Energy (DOE)/Energy Information Administration (EIA), 2006). This paper uses regression to evaluate the effect of deregulation on electric plant-level carbon emissions. Most previous research has focused on Environmental Protection Agency (EPA) regulated pollutant emissions and has been based in large-scale market simulation modeling. The focus here is on unregulated GHG emissions on the plant level. Given the rapidly escalating intensity of debate surrounding the impact of GHG on the environment and the increasing likelihood of GHG regulation in the United States, this paper adds a timely alternative perspective on the intersection between market forces and environmental regulation.