This paper provides empirical evidence that U.S. power plants exhibit risk aversion when purchasing coal. Specifically …, I show that plants facing more spot coal price uncertainty sign longer duration coal contracts, purchase contract coal … from a larger number of origin counties, and pay higher contract coal prices. The trade-off between the mean versus …

long-run efficiency benefits by removing the incentive to over-invest in capital. The coal storage behavior of U.S. power … plants is an ideal setting to empirically assess this claim: coal stockpiles are adjusted far more frequently than … traditional forms of capital and regulators treat coal stockpiles as working capital. This paper estimates a dynamic plant …