Market Impacts of a Nuclear Power Plant Closure | Zendy

Lucas W. Davis | Zendy; Catherine Hausman | Zendy

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Market Impacts of a Nuclear Power Plant Closure

Author(s) -

Lucas W. Davis,

Catherine Hausman

Publication year - 2016

Publication title -

american economic journal applied economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 12.996

H-Index - 82

eISSN - 1945-7782

pISSN - 1945-7790

DOI - 10.1257/app.20140473

Subject(s) - closure (psychology) , revenue , nuclear power , nuclear plant , nuclear power plant , economics , natural resource economics , finance , engineering , market economy , nuclear engineering , ecology , physics , biology , nuclear physics

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)

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