Capacity utilization and new source bias: Evidence from the US electric power industry

Abstract

While prior research has shown that new source bias has increased construction costs and delayed the building of new electric power plants, this research explores the empirical question of whether increased operating costs caused by new source bias are larger than the cost savings of newer technology. If new sources do have higher operating costs, an incentive exists to utilize order plants more intensively. Statistical evidence of these differing utilization rates is found.