Three essays on the changing U.S. electricity industry

In 1996, the Federal Energy Regulatory Commission (FERC) sought to transform the wholesale electricity market with a series of market rules. A product of these rules was the establishment of regional transmission organizations (RTOs) and independent system operators (ISOs) charged with facilitating equal access to the transmission grid for electricity suppliers. The effect of these changes in market structure remains an open question. This dissertation attempts to quantify the impacts of this change in market structure in addressing important policy issues facing the electricity sector.;The first essay utilizes a panel data set of the 48 contiguous United States and a treatment effects model in first differences to determine whether there have been changes in delivered electric prices as a result of the establishment of ISOs and RTOs. This estimation shows that electricity prices fall approximately 4.8% in the first 2 years of an ISO's operation and that this result is statistically significant. However, this result is dependent on the presence of states that restructured their electricity markets. When these restructured states are removed from the data set the price effects of RTOs become indistinguishable from zero.;The second essay utilizes the diversity of the United States electricity market and a panel data set of electric utilities for the period 1990-2009 to study the effects that RTOs have had on the trade of wholesale electricity. It finds that the presence of a transparent wholesale marketplace for electricity has the effect of increasing participation, but that this participation occurs asymmetrically across types of electric utilities.;The third essay utilizes a model that simulates the dispatch of electric generating units in the state of Florida under various prices for CO 2 emissions, and analyzes the challenges that may arise in the determination of optimal emissions abatement policy. It finds that the rate of abatement varies considerably with the price of CO2 emissions. It demonstrates how the incremental cost curve of emissions abatement may intersect with a CO2 tax at many levels of abatement, allowing for different characterizations of the 'optimum'.