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The Guy at the Controls

The Guy at the Controls

Labor Quality and Power Plant Efficiency

(p.79) 3 The Guy at the Controls
International Differences in the Business Practices and Productivity of Firms
James B. BushnellCatherine Wolfram
University of Chicago Press

Labor policies in the electricity industry have been significantly impacted by its historical status as either a publicly-owned or regulated utility business. At the same time, evaluating and improving labor practices may have been given low priority due to the fact that labor costs constitute a small portion of industry costs. This chapter presents evidence that, despite the fact that overall labor costs are small, the quality of certain workers can have a significant impact on the operations of power plants. Power plant operators, in particular, can influence the fuel-efficiency of the plants under their control in a myriad of individually small, but in aggregate consequential, ways. There is good reason to believe that this effect is more prominent in the more complex coal facilities than in gas-fired power plants. The examination of performance data from U.S. power plants concluded that the individual operators could influence fuel efficiency by more than 3%. While this figure may sound modest, it translates into a difference worth millions of dollars in annual fuel costs at larger facilities. More generally, these results provide a clean measure of the extent of worker heterogeneity within the same job description at a particular plant.

Keywords:   labor quality, power plant efficiency, electricity industry, labor costs, power plant operators

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