  This paper presents empirically-estimated average hourly relationships
between regional electricity trade in the United States and prices, emissions,
and generation from 2015 through 2018. Consistent with economic theory, the
analysis finds a negative relationship between electricity prices in California
and regional trade, conditional on local demand. Each 1 gigawatt-hour increase
in California electricity imports is associated with an average $0.15 per
megawatt-hour decrease in the California Independent System Operator's
wholesale electricity price. There is a net-negative short term relationship
between carbon dioxide emissions in California and electricity imports that is
partially offset by positive emissions from exporting neighbors. Specifically,
each 1 GWh increase in regional trade is associated with a net 70-ton average
decrease in CO2 emissions across the western U.S., conditional on demand
levels. The results provide evidence that electricity imports mostly displace
natural gas generation on the margin in the California electricity market. A
small positive relationship is observed between short-run SO2 and NOx emissions
in neighboring regions and California electricity imports. The magnitude of the
SO2 and NOx results suggest an average increase of 0.1 MWh from neighboring
coal plants is associated with a 1 MWh increase in imports to California.
