In an earlier set of posts, I analyzed several economic reports about the impact of shutting down Vermont Yankee. I posted the most straight-forward reports as Economic Report Well Constructed. These reports reviewed the situation if Vermont Yankee continues to operate past 2012 with the situation in which it shuts down. With VY continuing to operate, reports show $60 to $80 million dollars a year more disposable income in Vermont, and around $7 million a year in state taxes.
This also translates into jobs lost or jobs gained. The graph of job creation and loss (above) comes from the Legislative Consensus Report, released in March of this year. The comparison between shutting down Vermont Yankee and keeping it open is straightforward, and agrees with results from several other economic studies. The job consequences are shown in the chart above.
Aside: As I discussed in another post, Economic Reports: De-Constructed, the assumptions for job creation for the Green scenarios are a bit murky, so we are sticking to the simple cases. End Aside.
If you double click on the chart, you can compare the black line (Vermont Yankee keeps running, no other change) with the red line (Vermont Yankee shuts down, no other change). You will see that shutting down Yankee leads to a job loss of around 1000 to 1500 jobs in the state. This loss goes on for years. It's ugly.
Rumors and Experience
Recently, however, I have been thinking that these estimates of job loss in the state are far too low.
Rumors about IBM
The rumor is that IBM might shut down its wafer fab plant in Essex Junction and move out of state if electricity rates rise. According to Wikipedia about Essex Junction, IBM has been in town since 1957. According to everyone, including Wikipedia, IBM is the largest employer in the state. Various websites list the facility as having around 6000 employees.
The latest word-on-the-street that I have heard is that some people in Essex Junction are selling their houses and looking for jobs out of state. They believe that the IBM plant will close if Yankee shuts down and electricity rates rise.
Is there any basis for these rumors? Who knows? I do know, however, IBM is very concerned with electricity rates. For example, when Vermont added an electricity surtax to fund Efficiency Vermont, IBM and other large electricity users insisted on a way to partially opt-out of the surtax. So Vermont started the Energy Savings Account program, allowing eligible Vermont business customers to self-administer energy efficiency through the use of an Energy Savings Account (ESA).
Experience with Other Manufacturing
In my day job, I write for various Vermont businesses, and one of my customers has been the Vermont Manufacturing Extension Center (VMEC). VMEC's primary mission is "To Improve Manufacturing in Vermont and strengthen the global competitiveness of the state's smaller manufacturers." VMEC is a public-private partnership, partially under the auspices of the National Institute of Standards (NIST). Among other things, NIST is the home of the Balridge National Quality Program and the prestigious Malcolm Balridge Quality Awards.
On VMEC's web page, Impacts and Successes, the right hand column contains links to many success stories. (I wrote some of these.) I hope you will look at these stories. Think about which of these manufacturing operations probably use a lot of electricity.
A partial list of the businesses of these VMEC clients includes:
Do you think these companies have significant electric bills? I think so.
Would a rise in electricity prices cause all these companies to fold? No. I'm not into the worst-case doomsday scenarios. (I leave that to the plant opponents.) Would it make them less competitive, less likely to hire, more likely to cut someone's hours? Would some of them perhaps fold?
I think so. Look at the companies, and draw your own conclusions.
In between rumors about IBM, and the list of VMEC clients, I believe the economic costs of a rise in electricity rates will be much worse than the legislative report indicates. Much worse. I hate to use hackneyed phrases, but possible job losses around Vernon are "just the tip of the iceberg" for the effects on Vermont prosperity.
It's a big cold iceberg, and we don't need it. If we don't relicense Vermont Yankee, we'll be inviting that iceberg to dinner.