BBER Studies Economic Impact of EPA Clean Power Plan on Montana

November 18, 2015

MISSOULA – The implementation of the Environmental Protection Agency Clean Power Plan could be the most significant economic event to occur in Montana in more than 30 years, according to a study conducted by the Bureau of Business and Economic Research.

The study contends that options for compliance with the plan for Montana – which faces the biggest required reduction in CO2 emissions of any state in the country – could involve the closure of the coal-fired generating station in southeast Montana, the largest industrial facility in the state.

NorthWestern Energy commissioned the BBER research and analysis. The full report is online at http://www.bber.umt.edu/Econ/Industry.asp.

“Colstrip is more than a big employer,” said Patrick Barkey, BBER director and principal author of the report.  “It is the backstop of our electrical grid.”

The study outlines the changes to generating plants, transmission lines and other infrastructure that would bring Montana into compliance with emissions targets set in the plan while continuing to serve the needs of Montana business and households for electrical power.  Those changes include both early retirement of coal-based generation and the building of new natural gas-fired capacity to fill part of the void.

“We feel it is very important for Montanans to better understand the kinds of choices ahead of us,” said Bob Rowe, CEO of NorthWestern Energy.

While other options, such as the purchase of emissions credits from other states, may allow partial operation of Colstrip into the future, the availability and price of those credits is unknown. BBER’s study examines a compliance scenario for the state that does not depend on the actions of other states or on emissions trading markets that do not yet exist.

BBER researchers found the impact of implementation is a significant loss to the state economy of jobs, income, output, tax revenues and population. Within three years of implementation of the compliance plan, according to the analysis, the state economy would:

  • suffer a loss of more than 7,100 jobs, reflecting the regular and contractor jobs at all four units of the Colstrip generation facility, plus the neighboring coal mine and local government jobs supported by the significant property tax bills those facilities pay.
  • incur a loss of more than $500 million in annual income received by Montana households, which is made larger by the fact that the jobs lost due to the Clean Power Plan pay well in excess of the Montana average.
  • realize a loss of more than $1.5 billion in gross annual sales by Montana businesses and other organizations as Montana swings from being a state with significant energy exports to a state that must rely on imported power from other states and regions in periods of heavy load or during generation curtailments.
  • experience a decline in population, particularly in working-aged families and their children, as economic opportunities in our state worsen relative to other states.

While these economic impacts would fall most heavily on eastern Montana, the nature of the changes required by the regulation, as well as the changes in electricity prices overall, would impose sizable negative impacts on all regions of the state.

BBER is the pre-eminent collector of primary data for business, economic and social science in Montana. BBER is a research center that has provided information about Montana’s state and local economies for more than 50 years. For more information visit http://www.bber.umt.edu.

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Contact: Patrick Barkey, director, UM Bureau of Business and Economic Research, 406-243-5113, patrick.barkey@mso.umt.edu.