Do Two Electricity Pricing Wrongs Make a Right? Cost Recovery, Externalities, and Efficiency

Severin Borenstein, James B. Bushnell

NBER Working Paper No. 24756
Issued in June 2018, Revised in September 2018

---- Acknowledgments ----

Previously circulated as "Are Residential Electricity Prices Too High or Too Low? Or Both?." For outstanding research assistance and very helpful comments, we thank Stephen Jarvis. For valuable comments and discussions, we thank Hunt Allcott, Joseph Cullen, Lucas Davis, Larry Goulder, Stephen Holland, Paul Joskow, Erin Mansur, Nick Muller and participants in seminars at The Energy Institute at Haas-UC Berkeley, Berkeley-Stanford IOfest 2017, the University of Arizona's 2017 Environmental & Energy Economics Workshop, the 2017 Asia-Pacific Industrial Organization Conference, the Winter 2018 meeting of the National Bureau of Economic Research program in Environmental & Energy Economics, and the 23rd Annual POWER conference. This research was funded in part by a gift from Google to the Energy Institute at Haas. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

---- Disclosure of Financial Relationships for James B. Bushnell ----

Prof. Bushnell is a member of the Market Surveillance Committee (MSC) of the California Independent System Operator (CAL ISO). The MSC is an independent advisory committee to the Governing Board of the Cal ISO.

From July 2009 to June 2011, Prof. Bushnell was director of the Biobased Industry Center at Iowa State University. The Biobased Industry Center is supported by research gifts from companies and organizations involved in various aspects of the Biobased Industries. A full list of BIC sponsors can be found at : ADM, Boeing, Ceres, DuPont/Pioneer, General Motors, Iowa Corn Growers Association, Monsanto, Toyota, Virent, West Central. None of Prof. Bushnell's research has been directly funded by BIC.


Biobased Industry Center Members

The Biobased Industry Center’s advisory board is composed of representatives from industry and non-government organizations. Industry partners that provide financial support for the center have a representative on the board.

The board meets twice per year with the center’s leaders and principal investigators to identify and prioritize research areas as well as provide advice and guidance regarding issues, challenges, and opportunities of concern and importance to the industry. The board also develops the request for proposals, the selection process for center research projects, and linkages with additional industry partners.

Ian Purtle, Chair, Cargill

Tom Binder, Vice-Chair, Archer Daniels Midland Company

Ted Crosbie, Member, Monsanto

Martha Schlicher, Member, Monsanto

Kyle Althoff, Member, DDCE

Charles Brummer, Member, Samuel Roberts Noble Foundation

Russ Sanders, Member, Pioneer

Bryan Schramm, Member, Sundrop Fuels, Inc.

Jeff Stroburg, Member, West Central

Spencer Swayze, Member, Ceres

Scott McQueen, Member, ConocoPhillips

Candace Wheeler, Member, General Motors

Rodney Williamson, Member, Iowa Corn Growers Association

Bob Wimmer, Member, Toyota

Greg Keenan, Member, Virent

Andrew Held, Member, Virent

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