Report: Cost of electricity could go down in 10 years

Apr 6, 2010 - Bob Audette - Brattleboro Reformer, Vt.

If the state of Vermont were to pursue an aggressive policy to put in place regulations that would encourage the expansion of renewable energy sources in less than 10 years, state ratepayers might actually pay less for electricity than they do now.

That was one of the conclusions of a report presented last week to the Vermont General Assembly's Joint Fiscal Office.

"Right now, renewable energy is more expensive than natural gas," said Thomas Kavet, of Kavet, Rockler and Associates, which prepares reports for the JFO. "All these renewable energies are fairly pricey, even with the tax credits. But if you take policy measures to support renewable energy, there is a better economic and fiscal outcome. The price of wind will go down, not up. The more turbines you build, the lower the price. The wind itself doesn't cost anything."

The same can be said for solar power, he said.

The report, "Consensus Economic and Fiscal Impact Analyses Associated with the Future of the Vermont Yankee Power Plant," studied four different scenarios for Vermont's energy future.

While prices for electricity will go up if Yankee is closed in 2012, they will eventually go down as more and more renewable energy sources go on line, said Kavet.

While electricity from nuclear power plants is relatively low right now, he said, you have to take into consideration the cost of building new power plants and fuel costs, which are bound to

increase as the demand for uranium increases.

"At some point, a finite resource is going to get more expensive," he said.

The report also takes into consideration the need for baseload power, a constant source of energy. Kavet said the pricing in the report accounted for the need to supplement intermittent sources of power when the wind isn't blowing or the sun isn't shining.

"We are pricing it with all the hours it does and doesn't run and with what power fills in," said Kavet. Prices still come in lower than today if the state pursues an aggressive renewable energy policy, he said.

But if Yankee closes in 2012 and the state keeps on doing what it is doing, there will be a dropoff in employment. On average, Vermont could see a reduction in jobs of about 1,000 per year. That's not 1,000 jobs lost each and every year, clarified Kavet. It's the number of jobs the yearly average would be reduced by.

But if the state was to push hard for renewable energy sources, employment until 2022 would be comparable to keeping Yankee open. Then, over the next 17 years, the increase in jobs would "rapidly outpace the VY relicense scenario," resulting in an average of 2,600 jobs per year by the end of the forecast term in 2040, according to the report.

If Yankee remains open and the state puts the pedal to the metal in developing renewable energy sources, the 2,600 jobs would remain steady from 2012 through 2040 with an average of $400 million in gross state product per year.

Yankee employment would remain steady while renewable energy jobs would increase over and above the number of people who work at the power plant. By 2032, when Yankee closes, those jobs would be lost resulting in a dropoff in employment with renewable energy jobs making up the difference.

But if Yankee is shut down in 2012 and placed into SAFSTOR, about 1,000 jobs and $60 million in disposable personal income per year will be lost until renewable energies are fully developed.

The model used in the report took 16 months to create, said Jeffrey Carr, of Economic & Policy Resources, which prepares fiscal analyses for the state's administrative branch.

Both Carr and Kavet produce two different forecasts and then get together to consolidate their reports, which is mandated by statute.

"What happens is we have a very in-depth discussion of what are the things that are driving certain forecasts," said Carr. "Then we come to a consensus of view about what we think the forecast is going to look like."

In addition to Kavet and Carr, the state's Department of Public Service, Central Vermont Public Service, Green Mountain Power, the Department of Labor, ISO New England and Synapse worked together to create the model, which included confidential data from Entergy, which owns and operates Vermont Yankee.

"We got the principals from these entities into a series of meetings over the course of more than a year to hash out all the issues," said Kavet. "There was no tilt one way or the other."

"We came up with a very strong fact-driven and objective analysis," said Carr. "It adds an awful lot of facts and understanding to the debate about where we are going with our energy future."

The report considers four different scenarios: the shutdown of Yankee and the pursuit of alternative energies at their current pace; the shutdown of Yankee but with aggressive legislative and agency support for the development of in-state renewable energy sources; the continued operation of Yankee from 2012 to 2032; and the continued operation of the plant coupled with an aggressive plan to pursue alternative energy sources.

The four different scenarios are considered "stakes" that define the model, which can be used to develop even more scenarios, said Carr.

Other studies haven't included as much information as the study collected to create the model, said Kavet.

"This was a whole lot more detailed than anything anyone has done before," he said.

The complete report can be found at www.leg.state.vt.us/JFO.

Bob Audette can be reached at raudette@reformer.com, or at 802-254-2311, ext. 273.

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