John L. Neufeld

Property Rights versus Public Spirit: Ownership and Efficiency of U.S. Electric Utilities Prior to Rate-of-Return Regulation

For over a century, American economists have been engaged in a vigorous theoretical and empirical debate over the economic performance of publicly-owned versus privately-owned electric utilities. The authors review the historical debate and use micro data collected by the U.S. Commissioner of Labor in 1897-98 to construct efficiency measures based on a nonparametric frontier production function. Since this is prior to state rate-of-return regulation, regulatory effects do not confound the analysis. The authors find that publicly-owned electric utilities were significantly more efficient than their privately-owned counterparts. Copyright 1991 by MIT Press.

Time-of-day pricing in the U.S. electric power industry at the turn of the century

Around the turn of the century, a debate occurred within the infant U.S. electric power industry on the issue of electricity rate structures. We describe those discussions and consider the views of some of the economists who first addressed the issue. Although they were ultimately unsuccessful, there were sophisticated advocates of time-of-day rates among the first engineers, utility executives, and economists to study electricity rates.

Electricity in the American economy : agent of technological progress

Preface Overview Electricity in Manufacturing: Its Role in the Organization of Production Systems Introduction Electrified Mechanical Drive: The Historical Power Distribution Revolution Electricity in Information Management: The Evolution of Electronic Control Electricity in Manufacturing: Its Role in Materials Processing Early Developments in Electroprocessing: New Products, New Industries Recent Trends Affecting Process Electrification: Costs, Industry Types, and Processing Options High-Temperature Electroprocessing: Steel and Glass Low-Temperature Electroprocessing: Pulp and Paper, Petroleum Refining, and Organic Chemicals Emerging Electrotechnologies: A Range of Innovations Electricity in Nonmanufacturing: Its Various Roles Coal Mining: Underground and Surface Mechanization Transportation: Electricitys Changing Importance Over Time Agriculture: Mobile Machinery and Other Energy Applications The Home: Evolving Technologies for Satisfying Human Wants Long-Term Quantitative Trends: Electricity Use, Productivity Growth, and Energy Conservation Electrification and Productivity Growth in Manufacturing Electricity Use and Energy Conservation Appendices: The Growth of Electricity Consumption in Historical Perspective Basic Statistical Data and Estimating Procedures: Long-Term Quantitative Trends Indexes

Price Discrimination and the Adoption of the Electricity Demand Charge

Between 1905 and 1915, as state price regulation became widespread, electric utilities in the United States faced severe competition. The primary source of electricity for industry then was not utilities but self-generation by the user in an “isolated plant.†The demand-charge rate structure first became widespread during this period. The demand-charge rate structure has been interpreted as a misapplication of the peak-load pricing principle, a view which has made its popularity a puzzle. Instead it was adopted as a sophisticated mechanism which institutionalized profit-maximizing price discrimination given the competition from isolated plants.

The Market for Capital and the Origins of State Regulation of Electric Utilities in the United States

We provide evidence that the problem of raising capital in the early days of the U.S. electric-utility industry motivated industry leaders to embrace state rate-of-return regulation in return for a secure territorial monopoly. Utility executives anticipated that this would lead to a reduction in borrowing costs. Using firm-level bond data for 1910–1919, we estimate a model and find that state regulation led to lower borrowing costs but that the magnitude of the reduction was small. We also find evidence that output of electric utilities in states with regulation was higher than output in states without regulation.

Corruption, Quasi-Rents, and the Regulation of Electric Utilities

Was the adoption of state utility regulation the result of a negative-sum competition among special interest groups vying for the monopoly rents created by regulation or a positive-sum elimination of corruption arising from appropriable quasi-rents? Previous empirical studies of the adoption of regulation have assumed the former. Using discrete hazard analysis, this study considers the latter and finds the data more consistent with the positive-sum protection of quasi-rents than the negative-sum creation and appropriation of monopoly rents.

A Paradox of Voting: Cyclical Majorities and the Case of Muscle Shoals:

Although social choice theorists have long recognized the theoretical possibility of cyclical majorities in democratic settings, it has been difficult to find a clear example of cyclical voting in a real-world setting. This is at least partly due to the fact that legislative rules suppress their appearance. This paper identifies and examines a definitive and significant example of cyclical voting. The cycle occurred in a series of votes in the U.S. Senate during one week in January 1925 on the issue of what the federal government should do with the Muscle Shoals works, initiated during World War I and still a significant political issue in the 1920s.

How politics, economics, and institutions shaped electric utility regulation in the United States: 1879–2009

The history of electric utility regulation at both the state and national level from the beginning of the industry through the aftermath of the California energy crisis of 2000–01 is presented. That history was partly determined by the economics of the industry – on the supply side by its cost structure, network characteristics, and lack of storability – on the demand side by its price inelasticity for all but the largest consumers, and partly by politics. These factors influenced the institutions that were created to regulate the industry, a process also complicated greatly by US federalism. The intensity of regulation waxed and waned in response to real or perceived problems in the industry.

Falling Water: The Origins of Direct Federal Participation in the US Electric Utility Industry, 1902–1933

The federal governments role as a direct producer in a non-defense, non-distressed American industry is unique to electric power. This participation arose during the first three decades of the twentieth century; it was politically controversial then and remains so today. We seek to explain how and why the federal government got into the electric utility business. The convergence of technological, economic, and political forces paved the way for federal participation. The growth of long-distance transmission networks and the success of the Progressive movement were important factors. Because so many dam sites with hydroelectric potential were on public lands in western states, and because hydroelectricity could help pay for those dams, even conservative Republicans like Herbert Hoover came to accept the involvement of the federal government. After the election of Franklin D. Roosevelt in 1932, the federal government accepted the task with enthusiasm as part of a plan for the economic development of entire river basins.

To Admit or Not to Admit: The Question of Research Park Size.

A theoretical model is used to explore the determinants of the optimum size of a private research park and the effect of university affiliation on that optimum size. Parks are assumed to operate as cooperatives where costs are equally shared among the member firms, and optimality occurs when the firms’ average net benefits are maximized. To achieve this, existing members of a park will limit the parks size, denying entry to firms who wish to join and are willing to share the costs. University affiliation may either increase or decrease the optimum size of a park.