Comparative Study of the Impacts of U.S. Electric Deregulation on Renewable Energy Investments and Retail Electricity Prices in Florida, Massachusetts, and Texas
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Comparative Study of the Impacts of U.S. Electric Deregulation on Renewable Energy Investments and Retail Electricity Prices in Florida, Massachusetts, and Texas by Peter Yungkil Jang, MBA A Dissertation In Systems and Engineering Management Submitted to the Graduate Faculty of Texas Tech University in Partial Fulfillment of the Requirements for the Degree of DOCTOR OF PHILOSOPHY Approved Mario G. Beruvides, Ph.D., P.E. Chair of Committee Patrick Patterson, Ph.D., P.E., C.P.E. Milton Smith, Ph.D., P.E. Lloyd Heinze, Ph.D., P.E. Mark Sheridan, Ph.D. Dean of the Graduate School August 2020 Copyright 2020, Peter Yungkil Jang Texas Tech University, Peter Yungkil Jang, August 2020 ACKNOWLEDGEMENTS It has been a long and fruitful voyage to be an engineering researcher. I was very fortunate to have many Captain Shackletons who have helped me complete this challenging expedition. First of all, I would express my sincere appreciation to Dr. Mario Beruvides, my Advisor, who showed me the guidance in the journey of Systems & Engineering Management (SYEM). He has been so resourceful with his knowledge database in engineering, economics, technology, history, and poetry. He innovatively opened a wide range of doors for me to explore from a biological system to behavioral economics and chaos theory. My dissertation would not be possible without the insightful and constructive feedback from the faculty members on my Dissertation Committee, Dr. Milton Smith, Dr. Patrick Patterson, and Dr. Lloyd Heinze, and Graduate School Representative Dr. Kwanghee Jung. They are the driving engines in various disciplines behind the research power at Texas Tech University. I cannot forget my academic colleagues in the SYEM program, and their strong camaraderie. They never hesitated to share their experience and knowledge from various background, research areas, and their visions. Dr. Armando Elizondo Noriega, Dr. Naveen Tiruvengadam, Dr. Marko Dodig, Brent Robertson, Tom Monroe, Richard Burgess, Dr. Olufunke Oladimeji, and Tejas Gohokar, my heartfelt thanks to them. In this expedition, I have been accompanied by my supporting wife Grace and three grown children, Aronne, Koontze, and Julius. From time to time I was happy to share my work with my children, all business/economics majors, and received pleasant challenges from them with their econometric knowledge. They were cheering for me all the time during this voyage, celebrating my incremental achievements in the research world. Importantly, my admirable tributes go to my mother and my late father who taught the life-time values of persistent hard work to their children but never imagined their oldest son would be trained to be an engineer in Texas. Peter Yungkil Jang June 2020, Texas ii Texas Tech University, Peter Yungkil Jang, August 2020 TABLE OF CONTENTS ACKNOWLEDGEMENTS ............................................................................................................. ii ABSTRACT ................................................................................................................................... vii LIST OF TABLES .......................................................................................................................... ix LIST OF FIGURES ......................................................................................................................... x 1. INTRODUCTION ..................................................................................................................... 1 1.1 History and Background .................................................................................................. 1 1.2 Problem Statement .......................................................................................................... 2 1.3 Research Questions ........................................................................................................ 3 1.3.1 First Research Question ........................................................................................... 3 1.3.2 Second Research Question ....................................................................................... 4 1.4 General Hypotheses ........................................................................................................ 4 1.5 Research Purpose ........................................................................................................... 5 1.6 Research Objectives ........................................................................................................ 5 1.7 Delimitations...................................................................................................................... 5 1.7.1 Limitations ............................................................................................................... 5 1.7.2 General Assumptions ............................................................................................... 6 1.8 Relevance of this Study .................................................................................................. 6 1.8.1 Relevance of this Research ...................................................................................... 6 1.8.2 Benefits of this Research.......................................................................................... 6 1.9 Expected Research Results ........................................................................................... 7 2. LITERATURE REVIEW .......................................................................................................... 8 2.1 Introduction........................................................................................................................ 8 2.2 Relevant Definitions ....................................................................................................... 11 2.3 Federal Deregulation in the U.S. Electricity Market .................................................. 14 2.4 State-level Deregulation in the U.S. Electricity Market ............................................. 15 2.4.1 Massachusetts ........................................................................................................ 16 iii Texas Tech University, Peter Yungkil Jang, August 2020 2.4.2 Texas ...................................................................................................................... 17 2.4.3 Florida .................................................................................................................... 17 2.5 Deregulation Uncertainty and Diffusion Pathways .................................................... 18 2.6 Technology and Fuel Choices ...................................................................................... 19 2.7 Deregulation Concerns and Issues ............................................................................. 20 3. COMPARATIVE STUDY OF THE IMPACTS OF U.S. ELECTRIC DEREGULATION ON RENEWABLE ENERGY INVESTMENTS IN FLORIDA, MASSACHUSETTS, AND TEXAS ...................................................................................... 23 3.1 Introduction...................................................................................................................... 23 3.2 Literature Review ........................................................................................................... 25 3.2.1 Florida Electricity Market ...................................................................................... 25 3.2.2 Massachusetts Electricity Market .......................................................................... 26 3.2.3 Texas Electricity Market ........................................................................................ 27 3.2.4 U.S. Environmental Initiatives ............................................................................... 28 3.2.5 Government Incentives for RE Investments .......................................................... 29 3.2.6 Renewable Portfolio Standards (RPS) ................................................................... 30 3.2.7 RE Credit (REC) Market........................................................................................ 33 3.2.8 Assessments of RE Investments ............................................................................ 34 3.2.9 Concerns and Issues in Renewable Investments .................................................... 34 3.3 Data Collection and Research Methodology ............................................................. 35 3.3.1 Data Collection ...................................................................................................... 35 3.3.2 Research Methodology .......................................................................................... 38 3.4 Analysis Results and Discussion ................................................................................. 39 3.4.1 Behavior over Time (BOT) Charts ........................................................................ 39 3.4.2 Summary Statistics of Variables ............................................................................ 41 3.4.3 Multivariate Regression Model Estimation ........................................................... 42 3.5 Conclusions and Policy Implications ........................................................................... 48 iv Texas Tech University, Peter Yungkil Jang, August 2020 4. COMPARATIVE STUDY OF THE IMPACTS OF U.S. ELECTRIC DEREGULATION ON RETAIL ELECTRICITY PRICES IN FLORIDA, MASSACHUSETTS, AND TEXAS .....................................................................................