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Deregulation of the Electric Utility Industry: An Empirical Study

PFM, Vol. 5 No. 3, (2005)

The recent energy crisis in California has raised several concerns with respect to deregulation. Some
of these concerns relate to the high price and the cost of electricity. The purpose of this paper is to
investigate the impacts of the Energy Policy Act of 1992 and the Federal Energy Regulatory
Commission Orders of 1996 on the price of electricity and cost of fuel. Two empirical models are
developed to estimate the price of electricity and cost of fuel. Results do not support that these two
acts of deregulation led to production or cost efficiency in the electric utility industry.

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