Document ID: EPA-HQ-OAR-2002-0076-0063
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2001-04-02T04:00Z

CONS
UlTl
HG
rcFF
Economic
Impacts
of
Implementing
a
Regional
SO,
Emissions
Program
in
the
Grand
Canyon
Visibility
Transport
Region
Prepared
for:
Western
RegionalAir
Partnership
Market
Trading
Forum
Prepared
by:
ICFConsulting
January
2WO
rCF
CONSULTlNG
Agenda
m
Overview
of
Analytic
Framework
and
Inputs
to
REMI
m
Detailed
Discussion
of
Economic
Impacts
1
ICF
CON
I"
f­
lN
G
Regional
Economic
Impact
8
Regional
economic
impacts
were
analyzed
using
REMl's
Policy
Insight
Model.

AlO­
region,
53
sector
version
of
REMl's
model
was
acquired
to
simulate
the
regional
economic
impact
of
regional
SO,
reduction
policies
at
the
state
level
for
the
the
nine
GCVTC
states
and
the
single
tribal
region.

14t
Key
drivers
to
REMI
were
derived
from
the
economic
modeling
using
ICF's
IPM.

2
L
I
COINS
U
LTlN
CI
ICF
Key
Inputs
to
REMI
Key
inputs
to
REMI
derived
from
IPM
are:

­
Non­
fuel
expenditures
resulting
from
the
policy
Total
Capital
Investment
Annual
incremental
cost
­
Changes
in
wholesale
electricity
prices
­
Changes
in
fuel
production
and
consumption
­
Net
revenue
from
permit
allocations.

m
All
impacts
from
IPM
were
characterized
by
state,
sector
and
year.

!
cF
Key
Drivers:
Non­
Fuel
Expenditures
Incremental
Capital
Investments
1t
4
Annualized
Cost
(
byState
and
Sector)
Expenditures
from
Installation
of
Equipment
(
scrubbers,
new
generation
or
retrofits)

*
Capital
expendituresare
split
between
constructionand
equipmentpurchases
Regional
Purchasetheficients
(
RPC)
in
REMI
determinesalocatjon
ofexpenditures
across
regions
­
REMI
allocates
regional
expendituresby
sector
and
input
mix.

.
Secondary
effects
are
on
householdincome,
wages,
prices,
.
Net
Change
in
annualized
productioncosts
=
change
in
revenue+
changein
annual
capital
and
FOM+
Netfuel
cost
changes+
netpermit
revenues
­
Electric
generatorspass­
throughunrecoverable
cost
changes
or
excess
revenuesto
shareholders
Share
ownership­
national
and
distributed
based
on
household
income
*
Other
sectors
experiencedecreasedprofitability
due
to
increased
production
cost
>
Sectors
that
compete
regionally
pass­
through
costs
via
to
producers
and
consumers
5
Sectors
that
compete
nationallyexperience
a
change
in
market
share
3
Annual
Incremental
Cost
m
Annual
incremental
costs,
projected
by
IPM,
denote
the
compliance
cost
of
the
policy
and
are
incrementalto
the
base
case.

1
Annual
incremental
cost
consist
of
changes
in
capital
investment
and
changes
in
variable
and
fixed
operating
cost.

R
Annual
incremental
costs
affect
the
regional
economy
in
two
main
ways.

­
Non­
electric
industries
that
compete
nationallyexperience
a
decrease
in
competitiveness,
while
non­
electricindustries
that
compete
locally
change
their
product
price.
Electricgenerators
pass
through
unrecoverable
cost
changes
or
excess
revenues
to
shareholders.

­
Capital
investments
spur
construction
and
increase
equipment
purchase.

Incremental
Annual
Cost
in
2013
(
millions
1997$)
Environ­
Command
8,
State
Minontv
MTF
EPA
mental
Control
A2
10
25
32
62
37
CA
3
­
31
­
54
­
130
­
1
co
ID
­
7
­­
19
1
­
26
2
­
49
55
5
­
2
NM
5
15
19
38
1
NV
­
14
­
33
­
44
­
83
4
OR
­
9
­
9
­
9
­
9
4
UT
4
12
15
25
11
WY
11
28
40
75
102
Tribal
8
20
26
50
­
Total
11
9
I
­
16
21I
4
ICF
CONSUL7IY6
lncremental
Annual
Cost
in
2018
(
millions
1997$)

EnGron­
Command
&
State
Minority
MTF
EPA
mental
Control
CA
6
­
22
­
39
­
37
­
2
co
15
39
43
33
47
ID
1
I
1
1
­
NM
NV
5
­
2
IO
­
12
3
­
a
5
­
3
­
6
OR
2
2
2
­
1
4
UT
1
16
20
21
12
WY
24
41
51
199
108
Tribal
3
9
I1
1
2
Az
5
25
41
68
40
._

Total
60
121
145
274
210
CON5I)
LTING
Annual
lncremental
Cost
(
Continued)
Sources
located
in
AZ,
CO
and
WY
bear
most
of
the
cost
(
primarily
capital
investment
costs)
associated
with
the
command
&
control
scenario
because
a
large
share
of
the
BART­
eligible
sources
are
located
in
these
states.

Sources
located
in
CA
realizes
lower
costs
in
2013
and
2018
under
the
trading
scenarios
because
of
the
lower
level
of
repowering
of
existing
oil/
gas
steam
units
relative
to
the
Baseline.

5
Annual
Incremental
Cost
(
Continued)
a
Similarly,
sources
located
in
CO
and
WY
realize
lower
costs
in
2013
under
the
trading
scenarios
relative
to
the
baseline
because
repowering
ofexisting
IC1boilers
is
postponed
in
anticipation
ofthe
policy
in
2018.

ICF
Trading
Cases
­
CONSULrlNG
Incremental
Cost
for
GCVTC
States
in
2018
500
Environmental
400
1M­­
IH
200
100
0
­
1
00
MTF
$
123
MM
­
200
Variable
O&
M
Fixed
O&
M
0Fuel
0Capital
6
EF
CON
II1
L1
ING
Incremental
Annual
Capital
Cost
in
2013
(
millions
1997$)

Environ­
Command
&
State
Minoritv
MTF
EPA
mental
Control
Az
1
3
4
a
21
CA
0
­
5
­
9
­
23
­
1
co
­
3
­
9
­
12
­
25
28
ID
0
0
0
0
0
NM
1
2
2
5
3
NV
­
4
­
9
­
12
­
25
3
OR
­
2
­
2
­
2
­
2
4
UT
0
­
1
­
1
­
2
6
Tribal
Total
­
4
­
14
­
20
44
107
WY
2
4
6
11
43
1
3
4
9
0
ICF
IncrementalAnnual
Capital
Cost
in
2018
(
millions
1997$)

Environ­
Command
&
State
Minority
MTf
 PA
mental
Control
Az
­
1
3
4
­
22
22
CA
0
­
5
­
9
­
27
­
1
co
3
11
10
­
24
27
ID
2
2
2
2
0
2
4
3
­
10
5
­
1
­
1
­
1
­
16
0
OR
3
3
3
3
4
UT
­
1
3
2
­
20
7
4
6
8
20
45
NM
NV
WY
Tribal
­
2
­
3
­
5
­
33
1
Total
9
23
17
­
127
110
7
L
B
ICpl<
ey
Drivers:
Changes
in
Wholesale
C
0
N
I
U
L'FI
N
t
in
Electricity
Prices
I
Electric
Distribution
Companies
I.
Changes
in
electricity
prices
affects
industrial,
commercialand
residential
customers.

I
*
Changes
in
wholesaleelectricity
prices
affects
utility
revenuesand
shareholder
profits.

11
CommercialAndustrial
Users
of
Electricity
Residential
User
of
Electricity
*
Changes
in
electricity
prices
for
the
­
Changes
in
electricity
prices
affects
residential
commercialindustrialsector
affects
the
costof
consumers
as
change
in
Consumer
Price
Index
raw
material
inputs.
(
CPI)
and
purchasingpower
­
Non­
electricsectors
that
compete
regionally
Changes
In
CPI
directly
affects
real
after­
tax
wage
are
able
to
pass­
throughinput
cost
changes
to
rate,
and
has
indirect
effects
on
migration,
labor
their
consumers.
force
and
government
services.

change
in
competitivenessrelative
to
Wholesale
Electricity
Prices
1p1
Projected
changes
(
relative
to
the
baseline)
in
wholesale
energy
prices
from
IPM
are
used
to
derive
changes
in
retail
energy
prices
paid
by
residential,
commercial
and
industrial
sectors.

I
We
assume
competitive
market
conditions
where
changes
in
wholesale
energy
prices
are
the
only
price
impacts
observed
by
end
users
under
a
policy.
Any
unrecoverable
costs
are
absorbed
by
shareholders;
revenues
in
excess
of
costs
are
passed
on
to
shareholders
in
the
form
of
increased
dividends.

8
CDNLU
LTlNG
Wholesale
Electricity
Prices
(
Continued)
Wholesale
energy
prices
in
IPM
represent
the
variable
cost
of
the
marginal
generating
unit
and
simulate
continuously
clearing
competitive
electric
generation
markets.

M
Electricity
prices
only
change
if
the
variable
cost
of
production
of
the
marginal
unit
changes.

I
Electricity
price
impacts
in
the
command
&
control
scenario
are
small
relative
to
the
trading
scenarios
because
capital
investment
(
which
does
not
directly
influence
variable
operating
cost)
dominate
the
compliance
strategy
under
ICF
CONSU
LilfiG
Wholesale
Electricity
Prices
(
Continued)
I
Since
fuel
costs
(
which
directly
influence
variable
cost
of
operation)
dominate
incremental
cost
under
the
trading
scenarios,
electricity
price
impacts
under
the
trading
scenarios
are
relatively
more
pronounced.

m
Decline
in
electricity
prices
in
2013
represent
inter­
temporal
tradeoffs
in
anticipation
of
the
policy
in
2018.
h
I
9
ICF
CDNSULrlNG
Wholesale
Electricity
Price
Impacts
Stale
Minoriiy
I
MTF
I
2013
Enwronmental
I
Command&
ConVol
EPA
1997
mills
percent
1897
mills
percent
kWh
change
­
A2
­
0.32
­
0.2%
CA
­
0.19
­
0.7%
4.33
­
0.1
%
CO
­
0.17
­
0.7%
­
0.32
­
02%
ID
­
0.19
­
0.7%
­
0.33
­
0.1%
NM
­
0.19
4.7%
­
0.33
­
0.1%
NV
­
0.18
­
0.7%
­
0.33
­
02%
OR
­
0.18
­
0.7%
­
0.33
­
0.1K
UT
­
0.18
­
0.7%
­
0.32
­
0.2%
WY
­
0.17
­
03%
­
0.32
­
0.
z
%
Tribal
­
0.17
­
0.7%/
­
0.32
­
1.30.1
­
0.43
­
1.7%
1
­
0.81
­
3.2%
1
­
0.05
­
02%
Average
­
0.18
I
­
0.32
1
­
0.42
I
­
0
80
I
­
004
Wholesale
Electricity
Price
Impacts
2018
State
Minority
I
MTF
I
EPA
I
Environmentill
Command
&
Control
1997
mills
percan
'
1997
mills
psrcen
11997
malls
percan
'
1997mills
psrcen
1997
mills
percent
IkWh
changa
1
IkWh
chanBi
1
RWh
change
/
kWh
change
A2
0.18
0.7%
I
041
17%
0.96
3.9%
0.0%
CA
0.29
1.1%
0.50
2.0%
063
25%
1.22
4.8%
0.05
0.2%
CO
0.18
0.7%
0.31
1.3%
041
17%
I
0.96
3.9%
0.0%
ID
0.24
1.0%
0.37
1.5%
051
20%
1.12
4.5%
0.03
0.1%
NM
0.26
1.0%
0.39
1.5%
053
21%
1.16
4.6%
0.04
0.2%
NV
0.24
0.9%
0.41
1.6%
052
21%
1.09
4.4%
0.03
0.1%
OR
026
%.
OR
0.39
1.5%
053
21%
1.16
4.6%
0.04
0.2%
UT
0.22
0.9%
037
1.5%
048
19%
1.04
42%
0.02
0.1%
WY
0.18
0.7%
0.31
1.3%
041
17%
0.96
3.9%
0.0%
Tribal
0.18
0.7%
0.31
13%
041
17%
0.96
3.9%
0.0%
Average
0.22
0.37
0
48
1.06
0.02
10
t
3
CONSULTING
ICF
Fuel
Mix
Impacts
in
REMI
Fuel
Productionand
Consumption
I
Changes
in
the
value
of
coalproduced
Changes
in
the
value
of
gas
consumptionby
the
ekcttic
utility
and
non­
utilitysector
Changes
in
fuel
expenditures
by
sector
and
region
is
modeled
as
a
change
in
dividends
for
publiGutilitysector
companies
and
as
production
costs
for
nonpublic
utility
sector
Companies
I
I
1
Coal
Gas
*
Change
in
the
value
of
coal
producedaffects
REMI
determines
the
share
of
gas
consumption
the
mining
sector
in
REMI
that
is
produced
within
a
particular
region
FU~
IProduction
&
Consumption
m
Regional
coal
production
is
a
key
driver
to
the
REMI
model
and
is
based
on
changes
in
coal
production
by
state
as
projected
by
IPM.

E
A
coal
producer
experiences
revenue
losses
(
gains)
when
less
(
more)
coal
is
produced
and
coal
prices
decrease
(
increase)
due
to
lower
(
higher)
quantity
of
coal
demanded.

1p
Changes
in
coal
production
have
been
valued
at
the
market
clearing
mine­
mouth
price
based
on
IPM
projections.

Changes
in
gas
consumption,
based
on
IPM
projections,
also
feed
into
the
REMI
model
I
_
I
t
CONSULllNG
ICF
Impacts
on
Coal
Markets
Coal
prices
and
coal
production
in
IPM
are
endogenously
determined
in
IPM
and
are
based
on
coal
supply
curves.

rn
Coal
revenues
increase
under
the
trading
scenarios.
The
total
increase
in
the
GCVTC
region
is
less
than
a
percent
(
0.7
%)
in
2018
under
the
Environmental
scenario.

m
Coal
revenues
decline
under
the
Command
&
Control
scenario.
The
total
decline
in
the
GCVTC
region
is
less
than
a
percent
(
0.5
%)
in
2018.

ICF
impacts
on
Coal
Markets
CDNSULilNG
Trading
Scenarios
B
Although
coal­
based
generation
(
and
coal
consumption)
decreases
in
the
9
states
GCVTC
region
in
the
Trading
scenarios,
coal
production
in
the
same
9
state
region
increases.

E
Revenues
from
coal
production
from
the
9
states
region
increases
as
the
SO,
reduction
requirement
becomes
more
stringent
across
the
trading
scenarios.

Increase
in
coal
revenues
is
largely
due
to
increased
exports
of
western
coals
to
other
parts
of
the
countrv.

12
ICF
Impacts
on
Coal
Markets
CONSULrl
NG
Trading
Scenarios
(
Continued)

1
Increased
demand
for
western
coals
is
offset
by
decreased
demand
for
coal
from
other
regions
of
the
country,
predominantly
the
mid­
west.

N
lncreased
export
of
western
coal
to
other
parts
of
country
reflect:

­
Decreased
demand
for
coal
in
the
GCVTC
region.

­
Less
stringent
national
SO,
cap
due
to
SO,
reductions
inthe
GCVTC
region.
This
leads
to
increased
coal
generation
in
the
rest
of
the
country.

Impacts
on
Coal
Markets
CON
I
ULTlN
G
Command
&
Control
Scenario
1
Under
the
command
and
control
scenario
coal
revenues
in
the
GCVTC
region
declines.

1
Command
&
control
is
a
capital
intensive
program
that
does
not
lower
coal
purchases
in
the
GCVTC
region:

­
Coal
consumption
increases
slightly
in
the
GCVTC
region.

­
lncreased
coal
demand
in
the
9
state
region
is
largely
the
result
of
additional
new
coal
capacity.

13
I
ICF
Impacts
on
Coal
Markets
CON
SI1
L
IIN
G
Command
&
Control
Scenario
(
Continued)
rn
Increased
coal
demand
in
GCVTC
region:

­
Puts
upward
pressure
on
western
coal
prices
and
plants
capable
of
receiving
non­
western
coal
switch
away
from
western
coal.

­
Decline
in
export
of
western
coal
to
other
parts
of
the
country
leads
to
a
decline
in
coal
production
in
the
western
states.

rn
Production
cuts
in
the
western
states
are
balanced
by
production
increases
in
the
Appalachian
region.

ic
CONSUL
F
:
lNG
Coal
Revenue
Impacts
by
State
in
2013
(
millions
1997$)
Environ­
Command
State
Minority
MTF
EPA
mental
&
Control
AZ
CA
co
ID
NM
­
0.01
NV
OR
UT
­
0.31
WY
2.87
2.93
2.95
2.85
­
30.70
Tribal
­
0.12
Total
2.87
2.93
2.95
2.85
­
31.14
14
ICF
LoN5ULiiNG
Coal
Revenue
Impacts
by
State
in
2018
(
millions
1997$)
Environ­
Command
State
Minority
MTF
EPA
mental
&
Control
HL
CA
co
13.40
ID
­
NM
­­
0.01
0.00
­
0.22
­
0.01
NV
­
OR
­
UT
­
21.02
30.20
52.08
WY
4.65
­
6.80
­
6.30
­
30.58
­
12.68
Tribal
­
0.12
­
6.25
­
19.03
­
0.12
Total
4.65
14.09
17.65
15.65
­
12.81
Gas
Consumption
s
Change
in
gas
consumption
is
relatively
small
under
the
Command
&
Control
scenario
because
the
policy
does
not
create
incentives
to
shift
to
natural
gas.

m
Gas
consumption
increases
with
the
stringency
of
the
trading
program
because
increased
generation
from
gas
is
a
significant
compliance
strategy.

15
ICF
CONSUL I ING
Gas
Consumption
by
State
in
2013
(
millions
1997$)

Environ­
Command
State
Minority
MTF
EPA
mental
&
Control
A2
9
20
26
53
0
CA
2
­
25
­
42
­
100
0
co
­
3
­
6
­
9
­
18
6
ID
0
I
2
5
­
2
NM
4
12
16
33
­
2
NV
­
8
­
20
­
26
­
53
5
OR
­
6
­
6
­
6
­
6
­
3
UT
4
11
14
27
0
WY
8
21
30
60
44
Tribal
6
14
19
37
0
Total
16
22
24
38
48
5CF
CONSULTtN
G
Gas
Consumption
by
State
in
2018
(
millions
1997$)
Environ­
Command
State
Minority
MTF
EPA
mental
&
Control
A2
7
17
24
92
0
CA
5
­
16
­
27
­
4
­
1
co
7
16
22
59
0
ID
­
1
­
1
­
1
0
0
NM
3
6
9
29
0
NV
I
4
6
11
0
OR
­
6
­
6
­
6
­
6
­
3
UT
3
8
12
39
0
WY
7
16
22
188
47
Tribal
5
12
16
48
0
Total
31
56
77
456
43
16
!.
CFPermit
Trading
Impacts
in
REMI
Revenue
Impacts
from
Allocations
I
­
Allowance
allocation
is
comparedto
projectedemissions
to
determine
net
allowance
position
by
sector
and
geographic
area
Revenue
impacts
from
allocation
depend
on
net
allowance
position
and
permit
price
I
Non­
Tribal
Revenue
impacts
from
allocations
for
sectors
'
that
compete
regionallyflows
through
as
changes
in
dividends
for
shareholders
Revenue
impacts
from
allocations
for
sectors
that
compete
nationallyflow
throughto
the
production
cost
of
that
sector
ICF
CONLULTING
I
1
Tribal
Revenueimpacts
from
allocation
to
tribal
areas
flow
through
as
changes
in
tribal
government
expenditures.

Allowance
Allocation
Revenues
I
Revenues
(
or
expenses)
from
net
allowance
sales
(
or
purchases)
represent
the
net
position
of
each
state
given
the
initial
distribution
of
allowances
and
projected
emissions.

mi
Data
on
the
distribution
of
allowances
by
sector
and
'
state
were
provided
by
MTF
participants.

P
Allowance
prices
and
the
emissions
in
each
state
were
projected
by
IPM.

IE
A
state
sells
allowances
if
its
allocation
exceeds
its
emissions
and
buys
allowances
if
its
emissions
exceeds
its
allocations.

17
CONSULTING
Allowance
Revenue
Impacts
in
2018
(
millions
1997$)
Minority
MTF
EPA
Environmental
AZ
3.5
3.2
6.5
17.8
CA
­
0.4
­
4.1
­
7.5
,
­
24.8
co
­
5.3
2.9
­
0.4
5.9
ID
1.6
­
0.4.
­
2.0
­
1
1.4
NM
­
2.6
­
2.9
­
2.4
­
31
.
O
NV
­
7.6
­
12.6
­
17.8
­
20.3
OR
­
2.0
­
5.5
­
9.0
­
22.1
UT
­
9.1
­
8.6
­
1
3.7
­
24.1
WY
7.6
6.8
14.4
47.6
Tribal
14.2
22.4
30.7
61.9
18
EF
CONS
I1
IT1
WG
Economic
Impacts
B
For
the
purposes
of
this
analysis,
three
indicators
of
economic
impacts
are
reported:
­
Employment,

­
Gross
regionalproduct,
and
­
Real
personaldisposable
income.

I­

I
ICF
Review
of
Key
Assumptions
m
Sectors
that
compete
regionally
are
able
to
flow
through
changes
in
productioncost
to
prices.

8
Sectors
that
compete
nationally
are
unable
to
flow
through
production
cost
increases
to
priceand
pass­
through
these
changes
to
shareholders
(
as
changes
in
profits).

Electric
utility
sector
operates
in
a
competitive
regional
market.
To
the
extent
that
price
increases
are
reflected
in
wholesale
electric
prices,
they
are
recovered.
Excess
recovery
or
under­
recovery
are
flowed
through
to
shareholders.

I
Shareholders
are
distributed
across
the
country
and
are
approximated
by
the
distribution
of
personal
income.
On
this
basis,
approximately
twenty
percent
of
the
shareholders
are
estimated
to
be
located
in
the
nin
19
I
ICF
Economic
Impacts
for
GCVTC
CONSULIING
States
in
2013
Erniron­
command
~
nges
Minority
MTF
EPA
mental
&
Control
Employment
1,965
3,738
4,180
7,801
4,473
GRP
(
Million
9s)
127
241
264
489
244
Real
Disp
Pers
Inc
(
Million
9%)
94
172
217
410
84
Note:
Totals
might
not
match
due
to
rounding.
Environ­
Command
%
Change
Minority
MTF
EPA
mental
&
Control
Employment
0.005
0.010
0.012
0.022
0.012
GRP
0.006
0.012
0.013
0.023
0.012
Real
Disp
Pers
Inc
0.007
0.013
0.016
0.030
0.006
­
!
CE
Economic
Impacts
for
GCVTC
States
in
2018
Environ­
Command
Changes
Minority
MTF
EPA
mental
8,
Control
Employment
­
926
­
1,418
­
1,434
­
7,918
­
625
GRP
(
Million
92$)
­
29
­
43
­
22
­
271
42
Real
Disp
Pers
Inc
(
Million
92$)
­
78
­
133
­
159
­
525
44
Note:
Totals
might
not
match
due
to
rounding.

Environ­
Command
%
Change
Minority
MTF
EPA
mental
&
Control
Ernpfoyment
­
0.002
­
0.004
­
0.004
­
0.021
­
0.002
GRP
­
0.001
­
0.002
­
0.001
­
0.012
­
0.002
Real
Disp
Pers
Inc
­
0.005
­
0.009
­
0.011
­
0.036
­
0.003
20
ICF
CON
).
U
L1
ING
Regional
Economic
Impacts
E
Changes
in
the
three
economic
indicators
are
positive
in
2013
and
negative
in
2018
by
a
similar
order
of
magnitude.

m
The
magnitude
of
the
changes
in
the
three
economic
indicators
are
all
very
small,
with
no
change
in
an
economic
indicator
being
larger
than
0.05
percent
at
the
regional
level.

m
Impacts
on
the
three
economic
indicators
are
relatively
small
because
the
cost
of
the
SO,
reduction
policies
are
all
relatively
small.
Even
the
highest
cost
of
$
274
million
to
all
sectors
is
well
under
one
percent
of
the,
total
production
cost
oft
IiEFCONSUITtNG
Command
&
Control
Scenario
rn
Economic
impacts
from
the
command
and
control
scenario
are
positive
in
2013
and
comparable
to
the
EPA
trading
scenario.

rn
Increased
economic
activity
in
2013
under
the
command
and
control
scenario
reflects
the
surge
in
capital
investmentthat
begins
in
2013.

II
The
onetime
surge
in
employment
in
2013
is
primarily
due
to
capital
investments
under
the
command
and
control
scenario.
Employment
levels
decline
with
some
lag.

21
I
ICFCONS
"
IT1
N
t
Command
&
Control
(
Continued)

m
Economic
impacts
in
2078
under
the
command
and
control
scenario,
however,
are
negative,
but
of
a
more
modest
magnitude.

m
Command
and
control
scenario
is
a
capital
intensive
program
primarily
affecting
the
electric
utility
sector.

8
Because
under
the
command
and
control
scenario
most
costs
impacts
are
capital,
electricity
price
impacts
in
competitive
markets
are
relatively
small.

I­

ICF
CON
S
"(
TINS
Command
and
Control
a
Declines
in
gross
regional
product
and
real
personal
disposable
income
occur
in
2018
under
the
command
and
control
scenario
after
positive
impacts
in
2013.

m
For
the
command
and
control
scenario,
the
longer­
term
economic
equilibrium
would
be
expected
to
approach
pre­
policy
levels
due
to
the
fact
that
the
policy
reflects
a
one­
time
shock
to
the
region
that
does
not
systematically
alter
the
non­
utility
sectors.

PI
Shareholders
of
the
utility
sector
continue
to
bear
the
costs
of
the
policy.
However,
these
effects
are
distributed
nationally,
with,
of
the
nine
state
area,
only
California
bearing
a
significa
22
­
ICF
CON
1U
L
TIN
G
Trading
Scenarios
I
All
trading
scenarios
yield
an
overall
increase
in
all
three
economic
indicators
in
2013,
and
an
overall
decrease
in
the
economic
indicators
in
2018.

The
dampened
decline
in
gross
regional
production
in
2018
under
the
EPA
scenario
represents
the
lagged
effects
of
2013.
EPA
trading
scenario,
unlike
the
other
trading
scenario,
has
no
incremental
cost
in
2013.

CONSULZING
ICF
Trading
Scenarios
Impacts
(
Continued)
II
Economic
impacts
from
the
environmental
scenario
are
greater
than
the
other
trading
scenarios
because
in
these
scenarios
nationally
competing,
non­
utility
sectors
bear
a
larger
portion
of
the
compliance
cost
relative
to
the
other
trading
scenarios.

m
Thus,
they
loose
competitiveness
and
market
share
with
attendant
impacts
on
employment,
wage
rates,
and
household
income.

E
The
Environmental
Scenario
also
has
the
lowest
level
of
capital
investment,
lower
than
the
Base
Case,
thus
employment
impacts
are
largest.

23
CONSULTING
ICF
Trading
Scenarios
Impacts
(
Continued)
m
California
bears
a
large
share
of
the
impacts
in
employment,
GRP
and
income
relativeto
other
states.
This
is
primarily
due
to
its
relative
size.
California
is
the
largest
of
the
nine
states,
in
terms
of
employment,
income
and
output.

­
income
was
used
as
the
proxy
for
shareholderdistribution.
Sixty­
six
percent
of
GCVTC
utility
shareholdersare
assumed
to
be
located
in
California.

­
GCVTC
electric
utility
shareholders
realizea
loss
in
income
when
increased
electric
utility
expendituresdue
to
the
policy
are
not
recoveredthrough
electric
prices.

­
California
experiencesa
larger
than
average
increase
in
electric
prices
which
increasesthe
cost
of
productionfor
all
other
inhustries.

COHSULrlNG
ICF
Trading
Scenarios
Impacts
(
Continued)

R
In
addition,
the
mix
of
industry
in
California
affects
the
relative
impacts.

­
Many
of
the
industries
located
in
California
compete
nationally
and
are
not
able
to
pass
through
the
increased
production
cost
from
higher
electricity
prices.

­
These
industriesbecause
less
competitive
as
a
result
of
the
the
increased
production
cost
from
electric
price
increase.

­
Loss
of
competitivenessleads
to
lower
output,
resulting
in
lower
employment,
reduced
income
and
lower
gross
regional
product.

24
l!
F
Impact
on
Gross
Regional
Product
in
2013
(
millions
1992$)

Environ­
Command
State
Minority
MTF
EPA
mental
&
Control
Az
CA
co
ID
NM
NV
OR
UT
WY
Tribal
Total
18
40
48
90
61
48
73
64
113
79
21
32
41
75
31
2
4
4
7
8
0
17
18
32
1
6
7
3
9
­
9
6
11
14
29
24
7
14
18
32
13
12
26
32
58
33
7
18
23
45
2
128
242
265
490
244
lOcF
Impact
on
Gross
Regional
Product
in
2018
(
millions
1992$)

State
Minority
MTF
EPA
A2
­
4
0.2
4
CA
­
53
­
102
­
126
co
13
39
47
ID
­
4
­
7
­
9
NM
1
1
1
NV
4
­
8
19
OR
­
9
­
17
­
26
UT
­
3
20
28
WY
16
13
18
Tribal
11
19
20
Total
­
29
­
43
­
22
E
nvironmental
­
75
­
259
76
­
61
­
27
37
­
74
24
65
21
­
271
Com
mand
&
Control
7
­
25
­
5
0
I
­
1
1
­
1
0
­
9
1
­
42
25
­­
ICF
CONSUL1
ING
Impact
on
Employment
in
2013
(
Number
of
Workers)

State
Minority
MTF
EPA
Az
298
688
850
CA
762
1,135
1,078
co
376
518
682
ID
44
79
79
NM
­
43
244
251
NV
110
147
58
OR
74
205
249
UT
117
215
270
WY
132
268
351
Tribal
100
247
314
Total
1,969
3,745
4,183
Environ­
Command
mental
&
Control
1,595
1,041
1,906
1,027
1,253
746
150
120
411
19
185
­
173
579
377
486
279
618
1,005
618
30
7,801
4,471
I1
lockImpact
on
Employment
by
State
in
2018
(
Number
of
Workers)
Environ­
Command
State
Minority
MTF
EPA
mental
&
Control
Az
­
125
­
104
­
88
­
1,708
108
CA
­
963
­
1,775
­
2,197
­
4,285
­
459
co
165
585
679
641
­
45
ID
­
80
­
135
­
186
­
1,247
1
NM
­
25
­
36
­
74
­
653
22
NV
42
­
162
265
439
­
193
OR
­
167
­
314
­
466
­
1,281
­
34
UT
­
101
106
140
­
307
11
WY
132
109
126
133
­
48
Tribal
198
312
371
346
15
26
I­

I
ICF
CDNlULllNG
Impact
on
Real
Disposable
Personal
Income
by
State
in
2013
(
millions
1992$)

Environ­
Command
State
Minority
MTF
 PA
mental
8
Control
AZ
13
30
39
72
23
CA
31
48
48
91
20
co
21
41
56
104
I1
ID
2
3
3
6
4
NM
0
7
8
14
1
NV
9
7
19
38
­
8
OR
6
11
14
29
9
UT
5
9
11
21
6
WY
4
8
10
17
16
Tribal
3
8
10
19
1
I­

Impact
on
Real
Disposable
Personal
Income
by
State
in
2018
(
millions
9992s)

Environ­
Command
State
Minority
MTF
EPA
mental
8
Control
A2
­
7
­
1
1
­
12
­
97
3
CA
­
52
­
97
­
121
­
213
­
29
co
2
11
13
8
­
2
ID
­
6
­
8
­
11
­
109
0
NM
­
2
­
3
­
5
­
24
0
NV
­
1
­
10
2
3
­
7
OR
­
13
­
22
­
31
­
69
­
2
UT
­
5
­
1
­
1
­
18
0
WY
4
3
3
­
6
­
5
Tribal
3
5
5
I
0
Total
­
78
­
133
­
159
­
525
27
I
ICF
CONSULTING
Sensitivity
Analysis
rn
Regionaleconomic
impacts
are
sensitive
to
assumptions
about
the
recovery
from
ratepayers
of
compliance
cost
borne
by
the
electric
generating
industry.

8
We
assumed
that
retail
prices
reflect
competitive
prices
in
wholesale
markets
based
on
marginal
energy
costs.
Thus,
revenues
in
excess
of
production
costs
accrue
to
shareholders.

m
However,
an
alternate
assumption
that
the
electric
utility
sector
may
be
able
to
fully
recover
its
costs
through
price
flow­
through
to
end
user
has
a
more
extended
impact
on
the
regional
economy.

JiCFCONLULTlNt
Sensitivity
Analysis
(
Continued)

rn
Under
this
alternate
assumption
of
guaranteed
cost
recovery,
the
production
cost
of
other
sectors,
using
electricity
as
an
input,
increases.

I
The
following
three
slides
detail
the
regional
economic
impact
of
a
command
and
control
scenario
for
2013
and
2018
under
these
alternate
assumptions
regarding
cost
recovery.

28
CONSU
iTlN1
1
ICF
Economic
Impacts
by
State
Million
92
$
Az
­
2
CA
63
co
­
26
ID
4
NM
­
4
NV
6
OR
9
UT
­
1
WY
26
Tribal
0
I
ICF
Economic
Impacts
by
State
Percent
Millicin
92
$
Percent
0.00
­
89
0.00
0.10
­
55
0.00
­
0.02
­
100
­
0.06
0.01
­
3
­
0.01
­
0.01
­
8
­
0.02
0.01
­
3
0.00
0.01
­
19
­
0.01
0.00
­
22
­
0.03
0.13
­
21
­
0.10
0.00
­
3
­
0.01
C0N5U1TlN~

Sensitivity
Analysis
Command
8
Control
Scenario
Changes
in
Real
Disposable
Income
Million
92
$
Percent
Million
92
$
Percent
Az
­
37
­
0.03
­
76
­
0.06
CA
28
0
­
16
0
co
­
39
­
0.03
­
80
­
0.06
ID
1
0.01
­
1
0
NM
­
2
­
0.01
­
5
­
0.01
NV
5
0.01
5
0.01
OR
2
0
­
8
0
UT
­
4
­
0.01
­
14
­
0.03
WY
I1
0.09
­
13
­
0.11
Tribal
­
1
­
0.01
I
­
1
­
0.01
29
Y
b
'
a.'
9
I
CONSULTING
ICF
Economic
Impacts
by
State
la1ysis­
Sensitivity
AI
Command
i3Contro
Changes
in
Empl
2013
Persons
Perceni
Az
­
93
0.
oc
CA
865
0.
oc
co
­
310
­
0.01
ID
49
0.07
NM
­
69
­
0.01
NV
63
o.
oa
OR
155
0.01
Scenario
byment
2018
Persons
Percent
­
1,400
­
0.05
­
873
0.00
­
1,600
­
0.05
­
5
­
0.01
­
124
­
0.01
19
0.00
­
257
­
0.01
UT
42
0.00
­
334
­
0.02
WY
805
0.25
­
273
­
0.08
Tribal
­
3
0.00
­
3
­
0.01
Total
1.504
­
4.850
CONiUIilNt
Conclusions
Change
in
employment,
gross
regional
product
and
disposable
income
are
by
state,
and
may
appear
to
be
more
significant
if
the
economic
impacts
are
concentrated
within
the
certain
localities
of
a
state.
The
modeling
framework
was
constructed
to
report
at
the
state
level.

Employment,
gross
regional
product
and
disposable
income
increasejust
before
a
policy
takes
effect
and
decrease
after
the
policy
takes
effect.

1
Changes
in
employment,
gross
regional
product
and
disposable
income
represent
anticipatedfluctuations
in
economic
cycle
due
to
policy.

30