Market Impacts of a Nuclear Power Plant Closure

Lucas Davis and Catherine Hausman

American Economic Journal: Applied Economics, 2016, vol. 8, issue 2, 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)

JEL-codes: D24 L25 L94 L98 Q42 Q48 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/app.20140473
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Citations: View citations in EconPapers (37)

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