THE DECISION OF ELECTRIC UTILITIES TO COMPLETE OR CANCEL NUCLEAR REACTORS (THREE MILE ISLAND, REGULATORY AGENCY, LOGIT MODEL, RIDGE REGRESSION, ENERGY)

KEVIN JAMES WYNNE, Fordham University

Abstract

The dissertation examined the decision of electric utilities in the United States to cancel or complete nuclear reactors. The model attempted to identify the significant factors that influenced the utility's decision. The time period for the study was from 1970 to 1983.^ The study used the logit qualitative response model. This model was used because the dependent variable was a binary choice between completing and cancelling nuclear reactors. The primary data sources were the Atomic Industrial Forum and the Energy Information Administration. The model was estimated using maximum likelihood methods. The study also uses ridge regression technique to evaluate the empirical findings.^ The empirical results provided some interesting policy implications for the electric utility industry. A significant result of the study was the evidence suggesting that the electric utilities were cancelling nuclear reactors because of changes in the demand for electricity. The firms were apparently cancelling the nuclear reactors without making any commitment on future methods of generation. Unfortunately the results provide us with little insight into the choice of electrical generation the industry will most likely pursue.^ The study also suggests that although Three Mile Island was a significant development in the nuclear power industry, it seems to have influenced new plant orders more than it influenced the completion/cancellation decision. The reason for this is that the electric utilities are rational profit maximizers, and in certain cases it is more economical to complete the plants. This can most likely be attributed to the regulatory process whereby a utility will not receive a return on the plant until it is actually generating electricity. Finally, there is some empirical evidence to suggest that the nuclear power industry would have been more likely to complete if there were a standardized plant design. Recent efforts by the industry to move in this direction appear to be warranted. ^

Subject Area

Economics, General|Energy

Recommended Citation

KEVIN JAMES WYNNE, "THE DECISION OF ELECTRIC UTILITIES TO COMPLETE OR CANCEL NUCLEAR REACTORS (THREE MILE ISLAND, REGULATORY AGENCY, LOGIT MODEL, RIDGE REGRESSION, ENERGY)" (January 1, 1985). ETD Collection for Fordham University. Paper AAI8521424.
http://fordham.bepress.com/dissertations/AAI8521424

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