Restructuring the Rate Base

While electricity market restructuring appears to have lowered generation costs, it does not seem to have benefitted consumers. Where did the savings go? This paper evaluates whether the downstream T&D utilities that remained rate regulated capitalized savings into earnings by increasing their capital stocks. Returns on these additional assets raise delivery charges for customers with restructured utilities. I use a matched difference-in-difference design based on proximate, similarly sized utilities with an annual panel of US utilities' capital stocks from 1993 to 2009. Nine years after divestiture, the average restructured utility held an additional $0.45 billion (9.5 percent) of T&D capital.