Productivity analysis of U.S. electricity generation
MetadataShow full item record
This dissertation focuses on two major analyses of U.S. electricity generation. One is the relationship of productivity change and financial-performance change. The other is the measurement of productivity that incorporates all of the environmental externalities (SO2, NOx and CO2) affecting our health and well-being. Since 1995, the U.S. electricity generation has experienced a divergence between productivity and financial performance. Though numerous studies have attempted to examine changes in productivity in U.S. electricity generation, no one has related productivity change to financial-performance change or included all of the environmental externalities into the traditional measurement of productivity. In addition, no researchers have used a two-level panel of U.S. electric generating plants and utilities in their productivity studies. The advantage of the two-level panel not only allows an evaluation of the performance of the utilities but also extends to each of the plants within the utility that contribute to the utility’s performance. Linear programming techniques are used to analyze models in this dissertation. The empirical findings are: (i) over the entire period of 1994-2001, utilities’ profit change using Bennet indicator declined, while their productivity improved; (ii) the negative change in size of utilities’ operations (the activity effect), and the increase in aggregate input price were the causes of the divergence between productivity and financial performance; (iii) the positive productivity was mainly contributed by technology progress at best-practice utilities, but this technology progress did not diffuse over other utilities; (iv) the index of utilities’ profitability change using Fisher’s ideal index increased because the index of total revenue was larger than the index of total cost, and because the growth in productivity index was larger than the deterioration in price ratio index; (v) the Fisher’s ideal indexes of productivity and price ratio were consistent with the Bennet indicator of productivity effect and price effect over the entire period, respectively; (vi) “good” and “bad” plants within the utility could be identified in term of productivity and financial performance; (vii) when all three emissions were included, the Malmquist productivity index was lower than the conventional Malmquist productivity index that ignored the externalities; however, when only emissions of SO2 were included, the Malmquist productivity index was higher than the conventional Malmquist productivity index; (viii) the estimates of the shadow prices of SO2 abatement have increased over the entire period.