• DOI:10.5547/ISSN0195-6574-EJ-VOL30-NO2-3
• Corpus ID: 153516405

Powering Progress: Restructuring, Competition, and R&D in the U.S. Electric Utility Industry

@article{Sanyal2009PoweringPR,
  title={Powering Progress: Restructuring, Competition, and R\&D in the U.S. Electric Utility Industry},
  author={Paroma Sanyal and Linda R. Cohen},
  journal={The Energy Journal},
  year={2009},
  volume={30},
  pages={41-80}
}

• P. Sanyal, L. Cohen
• Published 1 May 2009
• Economics, Business
• The Energy Journal

This paper investigates the R&D behavior of regulated firms when they transition to a competitive environment. Using data from the US electricity market from 1990-2000, we analyze how competition, institutional changes, and political constraints have contributed to the precipitous decline in R&D expenditure by regulated utilities. We find that firms reduce their R&D significantly at the very early stages of restructuring or even when they expect restructuring to occur. Once the emerging institutional structure becomes clear, R&D spending recovers but is later offset by another decline when restructuring legislation is enacted. In addition, greater competition and the nearing of such competition adversely affects research spending. In aggregate, R&D declines by 78.6 percent after electricity markets are restructured. Firm and state characteristics matter, and a majority of the research is conducted by large generation companies located in pro-research states, especially if they are part of a larger holding company. Such characteristics have a different impact on research spending in the pre-and post-restructured periods.