utilities for the years 1980, 1985, 1990 and 1995.4 A list of the utilities and the firm num-
ber by which they are referenced henceforth in our tables is provided in Table 1. Since
technologies for nuclear, hydroelectric, and internal combustion differ from that of fossil
fuel-based steam generation and because steam generation dominates total production by
investor-owned utilities during the time period under investigation, we limit our analysis
to fossil fuel-based steam electric generation.
Variable definitions for inputs quantities and prices as well as output quantities are
generally consistent with those in Nelson (1984). The inputs are quantities of fuel (xE),
labor (xL), and capital (xK), measured as ratios of input expenditure to price. Electrical
output (y) is defined as the sum of residential and industrial-commercial output in 10
millions of kilowatt hour sales and SO2 emissions (b) are measured in tons. Details are
available from the authors. The output observations compiled by Daniel McFadden and
Thomas Cowing were updated using the Statistics of Privately Owned Electric Utilities in
the U.S. Over the 1980-1995 time period, xκ declined somewhat. More dramatic was the
greater than 20 percent reduction in xL and b. Finally, xE and y increased moderately.
Data on SO2 emissions is published on the EPA Acid Rain Website.5 The primary
data is for Clean Air Act Amendment Phase I and Phase II units and was aggregated to
the utility level. Whenever units were owned by more than one utility, emissions were
allocated by ownership share. Emissions of SO2 are measured in tons. Data on emissions
are available for 1980, 1985, and 1990 as historical EPA estimates, while the 1995 data are
actual (measured) emissions from EPA’s Continuous Emission Monitoring System. Thus,
4 The primary sources for Nelson’s sample are the Federal Power Commission’s Statistics of Privately
Owned Electric Utilities in the U.S., Steam Electric Plant Construction Cost and Annual Production
Expenses, and Performance Profiles - Private Electric Utilities in the United States: 1963-70. Additional
data were taken from Moody’s Public Utility Manual.
5 http://www.epa.gov/acidrain/scorcard/es1995.html
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