The Cost of Not Building Transmission: Economic Impact of Proposed Transmission Line Projects for the Pacific NorthWest Economic Region

August 22, 2008

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EXECUTIVE SUMMARY

The Pacific Northwest Economic Region (PNWER), a regional planning and facilitation organization established in 1991, promotes transboundary policy and planning in the Pacific Northwest. As one of the fastest growing regions in North America, the eight member political jurisdictions (i.e., the states of Washington, Oregon, Idaho, Montana, and Alaska; the provinces of Alberta and British Columbia; and the Yukon Territory) are dedicated to maintaining the $700B (US) regional economy and promoting additional economic growth through regional and bi-national cooperation. Within PNWER, 14 working groups are tasked to promote specific economic interests. The Energy I Working Group is tasked to identify supply and demand issues concerning the availability and cost of energy within the region, which requires the development of adequate and reliable power infrastructure (i.e., energy transmission lines and generation).

To attract new industries and keep pace with rapid growth, world-class communities require a reliable infrastructure of water, energy, transportation, law enforcement, and health-care services. Furthermore, communities must have access to these resources and services at an affordable cost. PNWER currently has adequate infrastructure and power, but capacity reserves are slim. Operating on this edge of reserves, a few PNWER communities and businesses have not been able to capitalize on opportunities for economic growth and higher paying, value-added jobs simply due to the lack of electrical power capacity. A recent example of a PNWER community losing such an opportunity was Boise, ID, in 2007. Due to the lack of electric power capacity, Boise was not able to capitalize in the expansion of two large technology-based businesses that would have resulted in thousands of high-paying; technology-based jobs. As a result, both firms dropped Boise off their short list of potential build locations. Other examples show similar economic impacts as a result of limited power availability. These include: (1) the 1979 curtailment of electric power to Portland General Electric commercial and industrial customers due to the continued shutdown of the Trojan Nuclear Plant; (2) cuts in aluminum production in December 2000 by several companies in The Dalles, OR, and Goldendale, WA, area so that the Bonneville Power Association could sell the electricity to California and the Pacific Northwest; and (3) FMC closure of the Pocatello, ID, phosphorus plant due to rising electricity costs and other economic factors. In response, PNWER and the Idaho National Laboratory (INL) conducted a simple impact study to evaluate the cost of not building transmission lines. In this study, probable economic impacts were forecast from a list of proposed electricity generation and transmission projects within and around the PNWER region. This report highlights the scenarios where economic opportunities are lost if key transmission projects identified within PNWER's integrated resource plans (IRPs) are not carried out.

While this report ranks evaluated projects according to the INL’s assessment of their overall economic impact to PNWER, it should be noted that all of the projects are considered valuable and necessary to adequately address growing electric power needs. The INL’s scoping study included the development of an economic model to evaluate the potential loss of economic activities, as well as the development of a web-based Geographic Information System (GIS) that integrates the proposed project’s information and the results of the economic study. These efforts will enable policy makers, utility planners, and the media to track the status of these critical transmission line projects.

Model results are not simply related just to the quantities of power delivered; but rather, they are functionally related to the many economic factors of any community, including average local power use, the economic productivity of a community, and other economic variables that are necessary to promote and maintain business enterprise. These relationships always suggest that the transmission of efficiently produced and available energy is crucial to maintaining an economic base as well as promoting economic growth.

Full Report: http://www.pnwersenergyhorizon.com/f ... _ntwtm3.pdf
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