Industry and economic impacts of restrictions on the growth of generating capacity. Interim report

Abstract

The effects on the electric power industry, the energy system and the US economy of restrictions on coal and nuclear generating capacity, of higher costs for new generating capacity and of higher fuel prices are examined. The analysis covers the period to 2000 and uses electricity-energy-economy simulation models to examine a wide range of different combinations of these restrictions and price increases. Each type of energy restriction is found to impose substantial costs on the electric power industry and electricity consumers, on the energy system, and on incomes and production throughout the economy. It is significant that restrictions or cost increases imposed on the electric power industry lead to repercussions and costs throughout the energy and economic systems, impacting even those not directly associated with the electric power industry. The nature of the costs is also significant - restrictions on the electric power industry, as well as impacting industry performance and prices, can lead to large increases in oil and gas imports and to slower growth of total production and real incomes. Each of these involves serious costs, one in the form of increased risk of economic disruption and political constraints, the other in the form of production and incomemore » foregone. Increases in fuel prices are found to be potentially the most damaging energy change, although higher costs for generating capacity, restrictions on coal capacity and restrictions on nuclear capacity each result in substantial costs. Further, these costs are found to compound greatly when there are simultaneous restrictions.« less