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The Guy at the Controls

The Guy at the Controls

Labor Quality and Power Plant Efficiency

Chapter:
(p.79) 3 The Guy at the Controls
Source:
International Differences in the Business Practices and Productivity of Firms
Author(s):
James B. BushnellCatherine Wolfram
Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226261959.003.0004

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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