Abstract
This study investigates the divestiture of transmission control from vertically-integrated power producers, aimed to maintain non-discriminatory access of the transmission network. I ask whether the vertical separation is sufficient to enhance how efficiently production is allocated among generators (i.e., regional production efficiency). Using a difference-in-difference strategy, I compare the treated region, Southwest Power Pool (SPP), with a control region, where no restructuring activities were implemented. Based on robust empirical results, I fail to find significant market wide evidence of improvement in regional production efficiency associated with the vertical separation of transmission control. However, looking into subgroups of generators, I find mixed evidence of cost savings via reallocation of production resources: (1) coal units are dispatched more efficiently after the restructuring; (2) this is not true for two types of gas units with different combustion technologies and cost efficiency.
Keywords
Get full access to this article
View all access options for this article.
