Projects and Related Studies
Socioeconomic Effects of Power Marketing Alternatives for the Central Valley and Washoe Projects: Regional Economic Impact Analysis Using IMPLAN
The Western Area Power Administration currently has power contracts with preference customers in its Sierra Nevada Customer Service Region (SNR). This power is generated at hydroelectric facilities that comprise the Central Valley Project (CVP) and the Washoe Project. All current contracts expire at the end of 2004, and Sierra Nevada will be developing a new marketing plan to take effect beginning in 2005. Results are developed for three SNR customer groupings. The utility group includes power scheduling utilities that sell to end-users. The agriculture group are customers that purchase power for farm irrigation. The other group are government agencies that are served by SNR directly.
A report prepared by Pacific Northwest National Laboratory (PNNL) economists summarizes the methods and conclusions of an economic analysis of the distributional effects of alternative actions that Sierra Nevada could take with its new marketing plan. These alternatives are summarized in the agency's Environmental Impact Statement (EIS), and this study directly supports the findings in the EIS.
The study evaluates the potential economic impacts projected to occur across the northern and central California area currently serviced by Sierra Nevada's customers. A standard input-output estimation approach was used to calculate impacts on regional output, labor income, and employment. The IMPLAN regional economic modeling system was used to develop regional models for the analysis. Individual regional models were developed for the overall area, the San Francisco Consolidated Metropolitan Statistical Area, the Sacramento Consolidated Metropolitan Statistical Area, the Redding Metropolitan Statistical Area, and the Bakersfield Metropolitan Statistical Area.
The analysis relies on information about the effect of Sierra Nevada's alternative actions on overall system power costs for the year 2005 developed by RW Beck and Associations. This information is used as input to the 2005 benchmarked IMPLAN regional economic models. The resulting economic impact estimates are inextricably linked to this input information about changes in system power costs, and the estimates reported here are of similar relative magnitude to those estimates. The Beck analysis attempts to account for a fully deregulated retail electricity market projected to be in full operation during the 2005 study year.
The potential economic effects of Sierra Nevada's actions are extremely small in relation to the size of the economies potentially affected, and, although they are calculable, they are not significant and often difficult to separate from random error present in the models. Estimated employment effects range from about 200 new jobs to 600 job losses in the northern and central California study area, depending on the alternative. Alternatives calling for Sierra Nevada to offer the CVP hydroelectric resource as a peaked resource, and supplementing its resources with spot market energy purchases, results in generally neutral economic impacts. Alternatives calling for Sierra Nevada to make substantial purchases of power generated from current renewable resource technologies (solar, wind, geothermal) generally result in the most negative economic impacts. The SNR Preferred Alternative has a generally neutral economic impact. Increasing the CVP power allocations to the utility customer group or decreasing them to the other customer group tends to result in positive economic impacts.
Project contact: Dave Anderson