Category: In the News

Power Consulting Inc. has been working with a host of different clients in 2023. We worked with the Idaho Headwaters Study Group to publish an economic evaluation of the proposed Stibnite gold mine. You can see that report here. You can also read a little more about it here. We are currently working on updating a report on the economic impacts of climate change in Montana for MEIC. That work will come out some time late this spring. We have a couple of projects in the works that we cannot currently tell you about, but they are pretty exciting and we look forward to telling everyone about them soon.

Thanks for checking in on us and we look forward to more exciting projects in 2023!

Cheers,

Donovan Power

Although it has been many years since we looked into the Glen Canyon dam, it seems that it is back in the news again. Unsurprisingly, not much has changed with respect to planning for its eventual dead pool elevation and the loss of generating capacity. It seems that we are collectively no closer to a viable solution for what to do when the dam cannot generate power, who will make up for the loss of generation, and how the flows through the Grand Canyon will be maintained. We really liked the Fill Mead First idea when we looked at it almost eight years ago. Something will have to happen soon, its a shame that more hasn’t happened yet.

Read more about it here:

https://www.sltrib.com/news/2022/05/30/what-will-happen-if-glen/

In 2019 we have been working on the Northwestern Energy rate case advocating for low income people in Montana, opposing the Pebble Mine in Bristol Bay Alaska, helping the Northern Plains Resource Council look at the possible impacts of the cleanup of Colstrip, and trying to get out into nature as much as we can. Donovan was recently married to Kelly Fullerton and their dog Taco has been a happy addition to the daily Power Consulting routine. You could say that life has been good for Power Consulting. We work daily on interesting science/economic related issues. Whether we are advocating for low income people in Montana to get a fair shake with Northwestern Energy with respect to the rate structure and their power bills or we are trying to present a fair view, that includes the potential costs of mining and not just the benefits, of the potential for a Gold mine in one of the most productive fisheries in Alaska, we have been keeping busy.

We show up to work every day excited to try and make the world use science to view the economic impacts of different large scale projects. Generally that means looking at the costs as well as the benefits of different mining projects or power plants in and around the U.S. We generally work for the “little guy” to make sure that their home is not trampled upon or that everyone is at least aware of the potential costs and benefits of the proposed project. The “bounty of nature” rarely is only positive and all too often the local communities that will see the benefits of a project also are left with the reality of the cleanup of that project.

If there is a mine proposed in your back yard, and the impact analysis appears to have been written by the mining company, and the DEIS only seems to see the benefits and none of the costs, then you should send us an email and we would be happy to see if we can help.

Cheers!

My father and I have worked on some very interesting projects in 2017. From fighting coal mine leases in Colorado and Montana to Colstrip 1 & 2’s retirement, we have stayed busy. In the recent past we helped the City of Missoula purchase its municipal water system, we helped a tribe in Idaho apply for Class I air shed designation, and we have continually warned of the economic impact of climate change in the Pacific Northwest with a specific focus on Montana. This broad spectrum keeps us on our toes as well as allowing us to learn on every project so that we stay completely engaged in our work.

We don’t know where 2018 will take us, but we are excited for the opportunity to do quality environmental science based work with some sort of economic angle. The climate is getting warmer and industry is looking to exploit every opportunity that they can before their window closes. We look forward to working on the front lines once again as we help to make the world a more sustainable place. As passionate life long skiers we have a vested interest in putting our science and expertise into action so that we can continue to ski the mountains of Montana that we love. We are passionately fighting so that we all can continue to have a high quality of life in the mountains. If you don’t live in the mountains, that’s ok, you can come and visit us and see what we are so excited about.

Cheers,

Donovan Power

For a more in depth summary, as well as all three phases of our full report, please follow this link:

Full Study_Power Economic Consulting_7_26_2016

THE IMPACT OF THE LOSS OF ELECTRIC GENERATION AT GLEN CANYON DAM

Summary of Study Findings

Background

The vast Colorado River system of dams, reservoirs, and diversions is facing an unprecedented water supply crisis. The 1922 Colorado River Compact, the legal foundation of this water system, was based on flawed assumptions that seriously overestimated Colorado River flow, underestimated public demand, and could not have foreseen the impacts of climate change. As a result, more water is allocated today than actually flows in the river. This water deficit is projected to increase significantly in the years ahead.(1)

The two main Colorado River reservoirs, Lake Powell, behind Glen Canyon Dam (GCD), and Lake Mead, behind Hoover Dam, are symptomatic of this crisis. These reservoirs have been hovering around half-full for the past decade. Studies have concluded that they are unlikely to both ever fill again, and could go dry within the next decade.(2) The stakes are high because the Colorado River supplies water to 40 million people and 4.5 million acres of agricultural lands.

GCD was authorized in 1956 as a part of the Colorado River Storage Project (CRSP). The primary purpose of the dam is to store excess water in Lake Powell for the upper basin states of Wyoming, Colorado, Utah, and New Mexico, which can be released, as needed, to Lake Mead downstream. A secondary purpose of the dam is to generate hydroelectricity, which is used to help fund operation of the Colorado River water delivery system and is sold at a discount to selected contractors.(3) As river flows continue to decline, Colorado River managers are increasingly concerned about maintaining Lake Powell to elevations that allow hydropower generation.

Some conservationists have questioned the benefits of attempts to preserve the status quo, and propose instead, fundamental changes in the management of the Colorado River system. For example, Glen Canyon Institute (GCI) has put forward the Fill Mead First (FMF) plan which would change the operation of GCD, allowing water to fill Lake Mead reservoir downstream before impounding it in Lake Powell. Others, such as former Commissioner of Reclamation, Daniel Beard, call for decommissioning and tearing down GCD, and permanently draining Lake Powell. These advocates contend that their plans could conserve large amounts of water now lost to seepage from Lake Powell, promote the restoration of Grand Canyon ecosystems, and allow the recovery of once-flooded portions of Glen Canyon.

Colorado River system managers are critical of such proposals because they argue that they would violate the Colorado River Compact. They also warn that these plans would jeopardize or eliminate hydroelectric power generation at GCD. They claim that this would cause spikes in rates for electric power customers and drastically reduce funding for the protection of endangered Colorado River fish species.(4) These contentions, however, are not well documented and questions have been raised about their accuracy.

Establishing an understanding of the economic impacts of a potential loss of electric generation at GCD is vitally important. Water managers and policy makers are now making far-reaching decisions on the management of the Colorado River, including how to allocate water between Lake Powell and Lake Mead. They need the best possible information on which to base these decisions.

The Glen Canyon Dam Hydropower Studies

In an effort to gain a greater understanding of these issues, Power Consulting, Inc. conducted a detailed analysis of the economic impacts to ratepayers in the region if Glen Canyon Dam (GCD) were to cease generating hydroelectric power. This research was reviewed by an independent panel of distinguished economists: David Marcus, Gail Blattenberger, and SpencerPhillips.(5)

The study was done in three phases:

• Phase I, focuses on the economic value of current production of the electricity at GCD as well as the impact that not generating electricity at GCD would have on the electric grid and on the regional economy.

• Phase II, focuses on the impact of the loss of GCD electric generation on the people and entities who directly or indirectly contract through the CRSP and Western Area Power Administration (Western) to receive their electricity.

• Addendum to Phase II, focuses on the financial costs and offsetting benefits if GCD were no longer able to generate hydropower.

Summary of Findings

The study concludes that, if Glen Canyon Dam stopped generating hydropower, it would have a negligible impact on the western power grid, would raise electric rates by an average of 8 cents per month for residential customers of hydropower, and could save tens of millions of dollars each year in taxpayer subsidies and water lost to system inefficiencies.

• The average annual value of Glen Canyon Dam’s electric energy represents less than one half of one percent of the sales value from electric generation in the western grid, and that the grid could readily absorb the loss of hydropower from the dam.

• The total impacts would be an increase of $16.31 million in electricity costs for consumers of Glen Canyon Dam power, but because they would be spread among 3.2 million customers, the individual impacts would be small in the vast majority of cases.

• The average annual value of the GCD electric energy is $153.3 million. This value is less than one half of one percent of the close to $31 billion in sales value from electric generation in the Western Electricity Coordinating Council (WECC).

• Average yearly cost increases would be $.08 per month for residential customers, $.59 per month for commercial customers, and $6.16 per month for industrial customers of Glen Canyon Dam electricity.

• A discontinuation of Glen Canyon Dam operations could have offsetting benefits of
approximately $74.8 million annually, including savings of $34.9 million in management costs and potential earnings of as much as $39.8 million annually due to increased hydropower at Hoover Dam and conservation of water that would have otherwise seeped into the banks of Lake Powell.

 

References:

(1) https://www.usbr.gov/lc/region/programs/crbstudy/finalreport/Executive%20Summary/CRBS_Executive_Summary _FINAL.pdf 

(2) https://scripps.ucsd.edu/news/2487

(3) Theses contractors include publicly owned electric utilities, municipalities, irrigation districts, military bases, and
native American tribes

(4) Oritz, K. Western Slope is Refusing to Divert More Water to Front Range. New Channel 5 Grand
Junction, Montrose, Glenwood Springs. Accessed 10.29.2015.
https://web.archive.org/web/20140715021756/http:/www.krextv.com/story/western-slope-is-refusing-todivert- more-water-to-front-range-20140711
more-water-to-front-range-20140711 and Harvey, N. To protect hydropower, utilities will pay
Colorado River water users to conserve. High Country News. 8.4.2014. Accessed on 10.29.2015
https://www.hcn.org/blogs/goat/doi-and-utilities-partner-to-stave-off-colorado-river-power-woes and U.S.
Bureau of Reclamation. Flow Regimes and Glen Canyon. Accessed on 10.29.2015.
http://www.creda.org/Documents/Messaging2.pdf

(5) David Marcus, an independent energy consultant with union, government, and NGO clients

Gail Blattenberger, Ph.D., Professor Emerita at the economics Department of the University of Utah with fields in
Econometrics and Environmental Economics

Spencer Phillips, Ph.D., principal of Key-Log Economics, LLC; lecturer at University of Virginia Department of
Economics and Batten School of Leadership & Public Policy; and adjunct faculty, Goucher College graduate program
in environmental studies.

PowerConsulting Critique of NWE-BBER CPP Economic Projections

Study: Keystone XL Could Lead to Enormous Emissions Increase

Study: Keystone XL Could Lead to Enormous Emissions Increase

Researchers reporting in Nature Climate Change say building the controversial pipeline could lead to the price of oil dropping and the rate of consumption increasing, pouring more emissions into the atmosphere.

By Rebecca Boyle

 

The Cowboy and Indian Alliance protests in Washington, D.C., in April as part of a weeklong series of actions by farmers, ranchers, and tribes against the Keystone XL pipeline.

Getty Images

August 10, 2014 1:04 PM Text Size: A . A . A

President Obama has said he wouldn’t allow the controversial Keystone XL pipeline’s construction unless it does not significantly worsen carbon dioxide emissions. But now a new study in Nature Climate Change says it will, and by a lot: Keystone XL could cause greenhouse gas emissions four times worse than the U.S. government’s projections.

Peter Erickson and Michael Lazarus of the Stockholm Environment Institute in Seattle calculated the project’s potential economic impact and its resulting impact on greenhouse gas emissions. In their model, extra oil flowing through Keystone XL could lower global oil prices, prompting people to buy more and use more. The pipeline would provide oil that would otherwise not be consumed, resulting in carbon dioxide that otherwise would not be belched into the atmosphere.

Erickson says no other researchers have previously done this type of analysis yet for Keystone XL, and that most energy and climate analyses focus on consumer demand and attempts to reduce energy consumption, not necessarily on the supply side.

“There’s been very little attention or analysis, even in policymaking, to ‘What about bringing new fossil fuels into the marketplace?'” he says. “It does perhaps seem obvious, but there is not necessarily a toolkit ready and waiting to do that kind of analysis.”

Erickson and Lazarus used a standard economic model to study the impact of increased oil supply on the market. In their analysis, they assume an increased supply causes competition among producers, which drives down the price. Using oil supply curves from market research firm Rystad Energy, they devised what’s known as an elasticity of supply. Basically, this tool calculates a percent change in oil price given a percent change in supply, Erickson says.

For each barrel of increased production, he says, 0.6 barrels would be new to global markets. That’s oil that wouldn’t have been burned otherwise. The net annual impact could range from adding virtually no extra CO2 to adding 110 million metric tons a year. That spread is four times wider than the U.S. State Department found in its own environmental analysis.

“Just considering these market impacts quadruples the emissions,” he says.

The paper is agnostic on whether Keystone XL would actually lead to expanded development in Canada’s oil sands; that’s a much more complex argument. But Erickson says that his and Lazarus’ key finding—that consumers, given a lower price, would buy more oil and cause additional emissions—has not been done before. Apparently, the U.S. State Department used different models to predict potential emissions, he says.

“It appears as if they didn’t look at the case in which global oil consumption would increase as a result of Keystone helping more oil be extracted,” he says, “so we’re as surprised as you are.”

Donovan Power, a geologist and consultant who has studied the impact of increased coal production in Wyoming’s Powder River Basin (but who was not involved in this study) says that it makes sense people would use more energy if given the opportunity to do so at a lower cost. But, he says, it’s more difficult to predict the real impact of a possible price change, he says. The State Department’s Final Environmental Impact Statement for Keystone XL allows for some growth in production without much of a price increase, Power notes—only about a $10 price change for an increase of 4.5 million barrels per day.

“If you give someone something cheaper, they’re going to use more of it; that’s certainly true on the global scale,” he says. “But it’s such a small change in the amount of oil you’re allowing to go into the system, and the global supply system is so large, I think it’s hard to forecast what the change would be.” He agrees the analysis is important, though, and that it should be part of the conversation.

Erickson says he and Lazarus aren’t making policy recommendations; they want to offer a new method for analyzing proposed projects like Keystone XL. With a few tweaks, their equations could also be applied to new coal mines, drilling platforms, or other fossil fuel project.

“Looking at fossil fuels from the supply side is a very interesting and important new area of research. There’s a need for analytics and for policy development,” he says. “We’re approaching this from a research perspective, but we want to work to have a policy impact as well.”

A guest speaker in Duluth yesterday long has been a dark cloud over any prediction of economic benefit related to the coming mining of precious metals in northern Minnesota.

 

http://www.duluthnewstribune.com/event/article/id/270300/group/homepage/

Tom talks about “The Free Lunch Approach” to economic impact studies.

The Frac Sand see saw.

Multipliers

Smell the dirt

Buy a truck-make a buck

Double whammy

Who holds the dollars?