This is a personal website. The research, views, findings, and opinions are my own, not my employer's.
Coauthor: Stephen Jarvis
Abstract: Utility companies recover their capital costs through regulator-approved rates of return. Using a comprehensive database of utility rate cases, we find a significant premium for regulated returns on equity relative to several capital cost benchmarks. We show that firms decide strategically when to initiate new rate cases, such that regulated returns respond more quickly to increases in underlying capital cost benchmarks than to decreases. Higher regulated returns incentivize utilities to own more capital: a one percentage point rise in return on equity increases capital assets by 3–4%. Overall we find excess costs to US consumers averaging $7 billion per year.
Coauthor: Arik Levinson
Abstract: Many governments and businesses would like to claim that their electricity use does not result in greenhouse gases. Because electricity cannot be traced from specific generators to purchasers, some regulators and users have proposed an approximation. Electricity purchasers would be credited with using clean power if they contract for electricity generated by particular zero- carbon suppliers to the grid or purchase certificates accompanying that zero-carbon generation, so long as those arrangements meet three conditions, or “pillars”: The associated clean power must be generated (1) nearby, (2) during the same hour, and (3) from newly constructed power plants. Even without those requirements, existing or planned newly constructed zero-carbon electricity generation is expected to account for 7 percent of US power in 2030. We show that with the requirements, this qualifying, already-planned power would be cleaner than average but not carbon-free. Electricity purchases meeting the restrictions will have average incremental emissions per megawatt-hour that range from 69 to 100 percent of unrestricted emissions. The three pillars do limit the amount of already-existing clean power that can be claimed, and so could have more climate benefits by reducing total electricity demand or encouraging construction of clean electricity capacity.
Ungated link, Appendix, Replication code
Coauthor: Wenfeng Qiu
Abstract: Oil and gas wells emit methane, a potent greenhouse gas. Emissions are minimally regulated, leading to a large climate externality. We explore how technologies can enhance welfare gains from regulatory policies by providing policymakers with more information. We focus on audit policies with realistic constraints, such as limited audit budgets and caps on fees. We develop a model of emission abatement, estimate the abatement costs using cross-sectional data from scientific studies, and simulate welfare gains from policies with varying levels of information availability. We show that targeting substantially improves the effectiveness of policies. In particular, a policy that audits 1% of wells with uniform probability achieves 0.3% of the gains of the infeasible first best, while targeting audits using remotely sensed emissions can achieve 16% of the first best, even with moderate fee levels.
@article{DunkleWerner/Qiu:2025,
title = {Information Matters: Feasible Policies for Reducing Methane Emissions},
ISSN = {2333-5963},
doi = {10.1086/732913},
journal = {Journal of the Association of Environmental and Resource Economists},
publisher = {University of Chicago Press},
author = {Dunkle Werner, Karl and Qiu, Wenfeng},
volume = {12},
number = {5},
date = {2025-08-20}
}