ECONOMIC IMPACT OF ELECTRIC POWER INDUSTRY DEREGULATION ON THE STATE OF WASHINGTON: A GENERAL EQUILIBRIUM ANALYSIS

By: Coupal, Roger H.; Holland, David W.
Cite

Citation

Coupal, Roger H.; Holland, David W., ECONOMIC IMPACT OF ELECTRIC POWER INDUSTRY DEREGULATION ON THE STATE OF WASHINGTON: A GENERAL EQUILIBRIUM ANALYSIS, Journal of Agricultural and Resource Economics, Volume 27, Issue 1, July 2002, Pages 244-260

Electric power markets are being deregulated nationwide with different impacts depending upon current policies and historical circumstances from region to region. The Pacific Northwest, with its historic abundance of low-cost hydropower and dependence on public power, with experience deregulation and conditioned by this legacy. This analysis focuses on the economic impacts of deregulation on the State of Washington. A 31-sector computable general equilibrium model is used to evaluate the impacts of Washington's economy. In a most likely scenario, electricity exports expand to high-priced regions. The impact on the state economy is a reduction in gross state product as a result of high electricity prices. Returns to capital increase, but returns to private capital and to labor decrease because much of the financial gain accrues to public power.