The Impacts of Construction and Operation of Three Generation Alternatives on the Economy of the Commonwealth of Virginia

Transcription

1 The Impacts of Construction and Operation of Three Generation Alternatives on the Economy of the Commonwealth of Virginia prepared for Dominion Virginia Power Richmond, Virginia by Stephen S. Fuller, Ph.D. Dwight Schar Faculty Chair and University Professor Director, Center for Regional Analysis George Mason University Arlington, Virginia With Chmura Economics and Analytics Richmond, Virginia November 14, 2013

2 The Impact of Three Generation Alternatives on the Economy of the Commonwealth of Virginia Executive Summary Dominion Virginia Power ( Dominion or the company ) filed its 2013 Integrated Resource Plan (IRP) with the Virginia State Corporation Commission on August 30, The IRP presented several alternatives for the development of generation and other resources to meet growing customer demand. The analyses reported herein consider the impacts of three generation alternatives on the economy of the Commonwealth of Virginia selected from among several generation development projects included in various alternative plans within the IRP. These three generation alternatives include: (1) a natural gas- power, combined- cycle station to be located in Southside Virginia with a generating capacity of 1,375 megawatts; (2) a third nuclear reactor at the North Anna Power Station near Mineral, Virginia with a generating capacity of approximately 1,453 megawatts and (3) an offshore wind farm located on an 112,800- acre leasehold of federal property approximately 27 miles off the coast of Virginia Beach with a maximum output capacity of 1,600 megawatts; Should the company proceed with these projects, the construction and operation of each of these three generation alternatives will impact Virginia s economy over the length of the construction period (7 years for the combined- cycle natural gas station, 13 years for the offshore wind farm, and 14 years for the third unit at North Anna) and will continue to produce economic benefits for the state s economy over the operational life span of each generation facility. These potential economic impacts will take three essential forms: contribution to the State s gross state product the value of goods and services produced within the state s economy; new personal earnings (labor income) generated to the benefit of workers residing within the Commonwealth of Virginia; and, jobs supported (full- time, year- round equivalent) by the direct outlays for construction and operations and the re- spending of these outlays within the state s economy. The annual economic impacts are summarized on the following tables (Tables 1-3) for each of the proposed generation facilities. Their total accumulative construction impacts reflect the respective length of each generation alternative s construction period. The economic impacts for plant construction are inclusive of pre- construction outlays (soft costs) and construction expenditures (hard costs) for materials, labor, equipment, management and all pre- licensing testing and overhead expenditures. Operating outlays include payroll and non- payroll expenditures, variable operations and maintenance outlays, and fuel costs. The totals are reported 1

3 including and excluding fuel costs, as it is the former that will generate the greatest impacts within the state economy. These outlays will extend over a multiple- year period and will impact the state s economy each year during that period in direct proportion to the dollar value of the annual construction expenditures and the share of these expenditures captured by businesses doing this work within the state. Both the total costs and the share of these expenditures that occur within the state are reported in these summary tables however only that share of the construction and operating expenditures occurring in Virginia is inputted into the economic impact model (IMPLAN Pro 2011) for the calculation of the respective impacts on the state s economy. The key determinant of the magnitudes of impacts is the complexity and scale of the Virginia economy as these determine its ability to retain and recycle the direct construction and operating expenditures initially captured by firms located and doing their business within the State. The multipliers for the construction activities for these three generation alternatives range from 1.60 to 1.63 reflecting a small variation in the mix of work done by Virginia- based firms during the construction phases. The multipliers for generation facility operations range from 1.64 to 1.72 (combined cycle natural gas is 1.63, offshore wind is 1.71 and nuclear is 1.72) reflecting the mix of labor and non- labor expenditures comprising the operating budgets of the respective facilities. Southside Combined Cycle Facility As shown in Table 1, the total estimated construction cost for the combined cycle natural gas facility is $1.3 billion with a construction period of seven years. Of these construction outlays, 53 percent would occur within the Commonwealth of Virginia. Construction Impact: On an average annual basis, the combined cycle project would represent direct expenditures in Virginia of $100.2 million. This average annual outlay for construction would contribute $160.6 million to the state s economy, support a total of 1,320 full- time, year- round equivalent jobs held by workers residing within the State with total annual personal earnings of $77.4 million. Plant Operations Impact: Excluding the expenditures for fuel, the economic impacts of plant operations would add $51.9 million to the state s economy annually and support a total of 348 jobs held by workers residing in Virginia with total personal earnings of $28.8 million. Including the expenditures for fuel, the economic impacts of plant operations would add $78.7 million to the state s economy annually, support a total of 430 jobs held by workers residing in Virginia with total personal earnings of $37.5 million. These economic benefits would recur annually for the life of the generation plant. 2

4 Table 1 Average Annual Economic Impacts from Construction and Operations: Combined Cycle Natural Gas (in millions of current year dollars) Type of Direct Outlays Total Personal Jobs Outlay Total In Virginia Output(1) Earnings(2) Supported(3) Construction $1,323.4* $100.2 $160.6 $77.4 1,320 Operations Excl Fuel $772.7 $31.6 $51.9 $ With Fuel 11, Sources: Dominion Virginia Power, Chmura Economics & Analytics, GMU Center for Regional Analysis. *total outlays during seven- year construction period; all other values are annual averages. See Table 3 for column heading definitions MW Offshore Wind Farm The total estimated construction cost for the offshore wind farm is $14.4 billion with a construction period of thirteen years (see Table 2). Of these construction outlays, 40 percent would occur within the Commonwealth of Virginia. Table 2 Average Annual Economic Impacts from Construction and Operations: Offshore Wind (in millions of current year dollars) Type of Direct Outlays Total Personal Jobs Outlay Total In Virginia Output(1) Earnings(2) Supported(3) Construction $14,408.3* $439.3 $715.7 $ ,684 Operations $5,398.2 $297.7 $508.4 $ ,219 Sources: Dominion Virginia Power, Chmura Economics & Analytics, GMU Center for Regional Analysis. *total outlays during thirteen- year construction period; all other values are annual averages. Table 3 for column heading definitions. 3

5 Construction Impact: On an average annual basis, construction of the offshore wind farm would represent direct expenditures of $439.3 million in Virginia. This average annual outlay for construction would contribute $715.7 million to the state s economy, support a total of 4,684 full- time, year- round equivalent jobs held by workers residing within the State with total annual personal earnings of $321.3 million. Plant Operations Impact: The economic impacts of plant operations (there are no fuel costs) would add $297.7 million to the state s economy annually, support a total of 2,219 jobs held by workers residing in Virginia with total personal earnings of $331.3 million. These economic benefits would recur annually for the life of the generation plant. North Anna 3 The total construction cost for the adding a third generator to North Anna nuclear plant is estimated tot total $13.8 billion with a construction period of fourteen years (see Table 3). Of these construction outlays, 73 percent would occur within the Commonwealth of Virginia. Table 3 Average Annual Economic Impacts from Construction and Operations: North Anna Three, Nuclear (in millions of current year dollars) Type of Direct Outlays Total Personal Jobs Outlay Total In Virginia Output(1) Earnings(2) Supported(3) Construction $13,779.3* $718.5 $1,162.6 $ ,210 Operations Excl Fuel $2,370.3 $143.1 $246.6 $ ,514 With Fuel 4, ,524 Sources: Dominion Virginia Power, Chmura Economics & Analytics, GMU Center for Regional Analysis. *total outlays during fourteen- year construction period; all other values are annual averages. Notes: (1) contribution to State s economy (GSP); (2) new personal earnings generate that accrue to workers living in Virginia; (3) total annual full- time, year- round equivalent jobs supported in the Commonwealth of Virginia. Construction Impact: On an average annual basis, the North Anna 3 project would represent expenditures of $718.5 million in Virginia. This average annual outlay for construction would contribute $1.163 billion to the state s economy, support a total 4

6 of 9,210 full- time, year- round equivalent jobs held by workers residing within the state with total annual personal earnings of $570.6 million. Plant Operations Impact: The economic impacts of plant operations for North Anne 3, excluding expenditures for fuel, would add $143.1 million to the state s economy annually, support a total of 1,524 jobs held by workers residing in Virginia with total personal earnings of $165.3 million. With fuel included, the economic impacts of plant operations would add $146.8 million to the state s economy annually, supporting a total of 1,524 jobs with total personal earnings of $166.3 million. These economic benefits would recur annually for the life of the generation plant. Economic Benefits of Generation Projects: Construction, Operation and the Availability of Electric Power The construction and operation of any of these electrical generation plants represents a major source of continuing economic impact to the benefit of the Commonwealth of Virginia. These benefits are measured by their respective contribution to the state s economy its gross state product, the number of jobs support by these annual expenditures to the benefit of workers residing in the state and the new personal earnings generated as a result of this new capacity- building activity during the period of construction. Economic impacts continue annually over the life span of the generation facility for its operations including maintenance and repair, on- site labor payroll, and the purchase of supplies and equipment from state- based businesses. The significance of these economic impacts can be measured within the context of the state s annual economic growth. Beyond these impacts of construction and operation are the economic benefits realized from the reliable availability of electrical power in support of the broad- based requirements of the new and expanding businesses and new residents that future economic growth will generate across the Commonwealth of Virginia. 5

7 The Impact of Three Generation Alternatives on the Economy of the Commonwealth of Virginia Research Objectives and Methodology The analyses presented in this report are designed to measure the direct and indirect impacts of constructing and operating alternatives for the generation of electrical power that have been included in the 2013 Integrated Resource Plan filed by Dominion Virginia Power on August 30, 2013 with the Virginia state Corporation Commission. These three generation alternatives include: a 1,375 megawatt natural gas- powered, combined cycle plant, a 1,453 megawatt nuclear reactor a third unit at North Anna Power Station, and an offshore wind farm capable of producing a maximum of 1,600 megawatts. The construction and operation of these electric power generation facilities would generate economic impacts to the benefit of the Commonwealth of Virginia beyond the benefits associated with the use of the electricity generated by these plants. These economic impacts can be measured in terms of their contribution to the state s economy its Gross State product (GSP) as well as the employment and personal earnings that constructing and operating these plants will produce. The magnitudes of these potential impacts will be governed by the nature of the work being done within the state regarding the design and engineering, the management, and manufacture of materials and equipment utilized in the construction and operation of these generation facilities. Also affecting the magnitude of these impacts will be the place of residence of the on- site construction workers and operations workforce as this will affect where these workers spend their wages and salaries thereby affecting the magnitude of indirect and induced impacts of the initial outlays as reflecting in the multipliers used in this analysis. The size and complexity of the state s economy and its ability to capture and retain the direct construction and operating outlays further affects the potential magnitudes of these economic impacts. The time periods for these analyses vary according to the length of the construction period. As a consequence, the economic impacts of construction are annualized to facilitate comparisons and totaled to provide the accumulated impacts over the extended construction periods. The potential economic impacts generated by the operations of the three alternative generation facilities are calculated on an annual basis with these impacts recurring each year over the operating life span of the facilities. In all cases, construction and operating cost data reflect projections for these costs at the time they occur; that is, they are presented as current dollars and not adjusted for inflation. The impact model utilized to calculate the economic impacts is the IMPLAN Pro 2011 reflecting the inter- industrial transactions and technical coefficients for the Virginia economy in 2011 (the most recently available). By using the current structure for Virginia economy as the frame of reference for 6

8 these impact analyses it is possible to measure the significance of these expenditures relative to today s economic outputs and performance measures. The objectives of this economic analysis are to: (1) calculate the value added to the Commonwealth of Virginia economy its Gross State Product (GSP) of the outlays associated with both the construction and operation of three alterative generation facilities; (2) calculate the personal earnings (labor income) that would be generated during the construction period for each generation facility and for post- construction operations that would be realized by workers residing within the Commonwealth of Virginia; and (3) calculate the number of full- time, year- round jobs (direct, indirect and induced) that would be supported by during the construction period by the outlays for the soft and hard costs associated with bringing each generation facility on- line and thereafter to maintain and operate each generation facility. Three Generation Alternatives This research analyzes the potential economic impact of three major projects included in various generation development scenarios in the company s 2013 Integrated Resource Plan, filed with the Virginia State Corporation Commission August 30, Natural gas- powered, combined cycle station One of the generation alternatives analyzed here in is a natural gas- powered, combined cycle facility with a generating capacity of 1,375 megawatts. The facility would be built at a yet- undisclosed site and be operational by the summer of The combined cycle facility will use technology that captures waste heat from gas- fired combustion turbines and uses the heat to produce steam. The steam, in turn, operates another turbine. This technology greatly improves the station s energy efficiency. The proposed facility is similar in size, technology and output to the Warren County Power Station, now under construction by the company and scheduled for commercial operation in the fourth quarter of 2014; and the Brunswick County Power Station, also under construction. The Brunswick facility is expected to enter commercial operation by the summer of North Anna 3 nuclear reactor A second generation alternative is the construction of a third nuclear reactor at the company s North Anna Power Station near Mineral, Virginia. The project would use economic simplified boiling water reactor (ESBWR) technology from GE- Hitachi Nuclear Energy Americas LLC. The company has filed an application for a Combined Operating License (COL) from the U.S Nuclear Regulatory Commission (NRC). Issuance of the COL is expected by the end of It must be emphasized that the 7

9 company has made no commitment to build this unit. A final decision will not be made until some point after the issuance of the COL. If the company decides to proceed, the unit would have a generating capacity of approximately 1,453 megawatts and reach commercial operation no earlier than October Offshore wind development The third generation alternative analyzed herein includes development of a major offshore wind farm capable of producing a maximum of 1,600 megawatts. Due to the intermittency of the resource, offshore wind has a low capacity factor (estimated at about 37 percent by the U.S. Energy Information Administration) and its output would be significantly lower than its rated capacity for most hours of operation. The facility would consist of wind turbines with individually rated outputs of 5 to 6 megawatts. The project would be constructed on an 112,800- acre leasehold of federal property approximately 27 miles off the coast of Virginia Beach. Dominion was the successful bidder for the lease block in an auction conducted by the U.S. Department of Energy s Bureau of Ocean Energy Management (BOEM) on September 4, The lease established stringent requirement for the auction winner, setting up a five- year development timetable. A Site Assessment Plan must be submitted to BOEM within six months of the award. Subsequently, a Construction and Operating plan must be submitted to BOEM for its approval within five years of the award. While the company believes that offshore wind could provide the largest, scalable offshore resource to Virginia customers, the technology still faces significant technological and cost barriers. The company is actively pursuing research and development initiatives aimed at lowering the cost of offshore wind, including participation in a consortium pursuing federal funding for a 12- megawatt demonstration project off the coast of Virginia. If the consortium obtains additional federal support, the demonstration project could be constructed by Direct Economic Impacts of Construction The total estimated costs for constructing each of the three alternative generation plants are presented in Table 4. Construction costs are inclusive of all pre- construction outlays associated with the construction phase (soft costs), the construction of the facility (labor, materials and equipment), and all pre- operations testing and licensing outlays. These on- site construction and pre- operations outlays are referred to as hard costs. The result of these expenditures is a generation plant ready to produce electrical power for Dominion s customers. In order to calculate the economic impacts of these construction expenditures on the Commonwealth of Virginia the share of these construction expenditures that are made within the state must be determined as only in- state direct expenditures 8

10 generate indirect and induced impacts to the benefit of the state s economy and contribute to its Gross State Product. Additionally, these construction outlays (soft and hard costs) span a lengthy period and will accumulate economic impacts over the length of that period. As the state s economy is measured on an annual basis, the measurement of economic impacts requires these in- state construction expenditures to be annualized. These annualized direct expenditures are also presented in Table 4. These annual average in- state construction outlays provide the input values for the economic impact analyses presented in Tables 5 through 7. Table 4 Southside CC Initial Capital Outlays (in millions of current dollars) Types of Annual Avg. Annual Avg. in Outlay Total Outlay Outlay Virginia ( ) ( ) ( ) Hard Cost $869.3 $124.2 $83.2 Equipment $298.7 $42.7 $2.1 Soft Cost $155.4 $22.2 $14.9 Total Outlays $1,323.4 $189.1 $100.2 Offshore Wind Initial Capital Outlays (in millions of current dollars) Types of Annual Avg. Annual Avg. in Outlay Total Outlay Outlay Virginia ( ) ( ) ( ) Hard Cost $5,941.0 $457.0 $228.5 Equipment $5,530.6 $425.4 $97.8 Soft Cost $2,936.8 $225.9 $113.0 Total Outlays $14,408.3 $1,108.3 $439.3 North Anna 3 Initial Capital Outlays (in millions of current dollars) Types of Annual Avg. Annual Avg. in Outlay Total Outlay Outlay Virginia ( ) ( ) ( ) Hard Cost $10,637.0 $759.8 $554.6 Equipment $0.0 $0.0 $0.0 Soft Cost $3,142.3 $224.5 $163.8 Total Outlays $13,779.3 $984.2 $718.5 Sources: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis 9

11 Total Economic Impacts from Construction The economic impacts of the in- state construction outlays, annualized over the construction period for each of the three generational plants described above are presented in Tables 5, 6 and 7. The direct outlays shown for each generation alternative represents the average annual construction expenditures captured by in- state businesses and labor directly associated with the construction of the plant. The total output value shown for construction of each alternative generation plant represents the total contribution of annual direct construction expenditures to the state s economy reflecting the respective multipliers for these in- state expenditures: for the combined cycle natural gas plant, for the offshore wind farm and for North Anna 3. These construction activities would directly support jobs and payroll on- and off- site and this spending would support additional employment and personal earnings throughout the economy as the initial direct expenditures are re- spent within the state s economy. The jobs supported and personal earnings reported in these tables are only those accruing to workers residing and business located within the Commonwealth of Virginia and include direct, indirect and induced jobs and related earnings. The variation in magnitudes of economic impacts accruing to the state from these three generation alternatives reflects the total construction budget and the percentage of construction spending for each plant that is captured within the state s economy. Of the total construction budget for the combined cycle natural gas plant, an estimated 53 percent of the construction outlays would be retained within the state s economy; for the offshore wind farm, an estimated 39.6 percent of the construction outlays would be captured by state businesses and workers; and for the proposed third unit at North Anna, an estimated 73 percent of the construction outlays would be retained within the state s economy. Table 5 Summary of Economic Impacts on the Commonwealth of Virginia From Southside CC Initial Capital Expenditures (in millions of current dollars, annual average ) Source Direct Total Personal Jobs Outlay Output Earnings Supported Hard Cost $83.2 $130.6 $62.4 1,116 Equipment $2.1 $3.4 $ Soft Cost $14.9 $26.5 $ Totals $100.2 $160.5 $77.4 1,320 Source: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis 10

12 Table 6 Summary of Economic Impacts on the Commonwealth of Virginia From Offshore Wind Initial Capital Expenditures (in millions of current dollars, annual average ) Source Direct Total Personal Jobs Outlay Output Earnings Supported Hard Cost $228.5 $358.7 $ ,784 Equipment $97.8 $155.8 $ Soft Cost $113.0 $201.2 $ ,310 Totals $439.3 $715.7 $ ,684 Source: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis Table 7 Summary of Economic Impacts on the Commonwealth of Virginia From North Anna 3 Initial Capital Expenditures (in millions of current dollars, annual average ) Source Direct Total Personal Jobs Outlay Output Earnings Supported Hard Cost $554.6 $870.7 $ ,189 Equipment $0.0 $0.0 $0.0 0 Soft Cost $163.8 $291.9 $ ,022 Totals $718.5 $1,162.6 $ ,210 Source: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis The annual average construction impacts on the Commonwealth of Virginia s economy for each of the three generation alternatives their respective contribution to GSP is as follows: combined cycle natural gas, $160.5 million; off- shore wind, $715.5 million and North Anna 3, $1,162.6 million ($1.16 billion). The jobs supported (full- time, year- round equivalent) within the state and the personal earnings generated (directly, indirectly and induced) as a result of these construction outlays and their re- spending within the state s economy on an annual average basis are as follows: combined cycle natural gas, 1,320 jobs with $77.4 million in annual earnings; off- shore wind, 4,684 jobs with annual $321.3 million in earnings; and North Anna 3, 9,210 jobs with annual $570.6 million in earnings. Economic Impacts of Facility Operations Continuing post- construction impacts on the state s economy will result from the operating outlays associated with each generation alternative. These are presented in Tables 8, 9 and 10. These operating outlays recur annually for the lifespan of the 11

13 plant including normal labor and non- labor expenditures, variable operations and maintenance costs including equipment replacement and fuel expenditures. The combined cycle natural gas and North Anna 3 each include fuel costs while these are not a cost in the offshore wind farm alternative. The portion of the total operating outlays captured by in- state suppliers, vendors, and workers are identified for each generation alternative and constitute the value input for the economic impact model (IMPLAN Pro 2011) in calculating total annual economic impacts as reported in Tables 11, 12 and 13. Table 8 Southside CC Operation Outlays (in millions of current dollars) Types of Outlay Total Outlay Annual Avg. Outlay Annual Avg. in Virginia ( ) ( ) ( ) Labor $165.3 $8.3 $8.3 Non- Labor Outlays $500.6 $25.0 $18.0 Variable O&M $106.7 $5.3 $5.3 Total Fuel Expenses $10,763.2 $538.2 $16.7 Total Outlays $11,535.9 $576.8 $48.3 Source: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis Table 9 Offshore Wind Operation Outlays (in millions of current dollars) Types of Outlay Total Outlay Annual Avg. Outlay Annual Avg. in Virginia ( ) ( ) ( ) Labor $2,836.9 $177.3 $177.3 Non- Labor Outlays $1,743.9 $109.0 $78.5 Variable O&M $817.4 $51.1 $41.9 Total Fuel Expenses $0.0 $0.0 $0.0 Total Outlays $5,398.2 $337.4 $297.7 Source: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis 12

14 Table 10 North Anna 3 Operation Outlays (in millions of current dollars) Types of Outlay Total Outlay Annual Avg. Outlay Annual Avg. in Virginia ( ) ( ) ( ) Labor $1,426.7 $89.2 $95.1 Non- Labor Outlays $541.2 $33.8 $26.0 Variable O&M $402.4 $25.2 $22.0 Total Fuel Expenses $1,812.8 $113.3 $3.7 Total Outlays $4,183.1 $261.4 $146.8 Source: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis Total Economic Impacts from Plant Operations The continuing impacts on the Commonwealth of Virginia s economy resulting from annual outlays to operate each of the three generation alternatives vary widely reflecting different maintenance and servicing requirements and their underlying payroll and employment. Projected operating outlays for combined cycle natural gas accruing to in- state vendors and labor total $48.3 million with this annual outlay contributing $78.7 million to the state s economy reflecting a multiplier of These outlays would support 430 full- time, year- round equivalent jobs (direct, indirect and induced) with total personal earnings of $37.5 million. Table 11 Summary of Economic Impacts on the Commonwealth of Virginia From Southside CC Annual Operating Expenditures (in millions of current dollars, annual average ) Source Direct Total Personal Jobs Outlay Output Earnings Supported Labor $8.3 $14.7 $ Non- Labor $18.0 $28.3 $ Variable O&M $5.3 $8.9 $ Fuel $16.7 $26.8 $ Totals $48.3 $78.7 $ Source: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis Projected operating outlays for the offshore wind farm accruing to in- state vendors and labor total $297.7 million with this annual outlay contributing $508.4 million to the state s economy reflecting a multiplier of These outlays would support 13

15 2,219 full- time, year- round equivalent jobs (direct, indirect and induced) with total personal earnings of $331.3 million. Table 12 Summary of Economic Impacts on the Commonwealth of Virginia From Offshore Wind Annual Operating Expenditures (in millions of current dollars, annual average ) Source Direct Total Personal Jobs Outlay Output Earnings Supported Labor $177.3 $315.4 $ Non- Labor $78.5 $123.2 $ Variable O&M $41.9 $69.8 $ Fuel $0.0 $0.0 $0.0 0 Totals $297.7 $508.4 $ ,219 Source: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis Projected operating outlays for North Anna 3 accruing to in- state vendors and labor total $146.8 million with this annual outlay contributing $251.6 million to the state s economy reflecting a multiplier of These outlays would support 1,524 full- time, year- round equivalent jobs (direct, indirect and induced) with total personal earnings of $166.3 million. Table 13 Summary of Economic Impacts on the Commonwealth of Virginia From North Anna 3 Annual Operating Expenditures (in millions of current dollars, annual average ) Source Direct Total Personal Jobs Outlay Output Earnings Supported Labor $95.1 $169.2 $ Non- Labor $26.0 $40.8 $ Variable O&M $22.0 $36.7 $ Fuel $3.7 $5.0 $ Totals $146.8 $251.6 $ ,524 Source: Dominion Virginia Power; Chmura; GMU Center for Regional Analysis The full magnitude of economic impacts resulting from the construction and operation of the alternative generation plants examined herein is determined by their respective total construction cost over an extended construction period and continuing operating costs over the life span of the plant. The percentage of these construction and operating outlays that is captured by in- state suppliers and vendors and workers residing within the state determines the incremental gains to the state s economy while the scale and complexity of the state s economy 14

16 determines its ability to re- cycle and multiply these direct expenditures to the benefit across its business base as reflected in the multipliers for each type of construction and operating outlay. These multipliers reflect a reflectively small range of variation from 1.60 to 1.72; that is, for each one dollar ($1) of construction or operating outlay made by Dominion that is retained within the state, its Gross State Product will realize a total benefit ranging of from $1.60 to On an annualized basis, these outlays and their impacts to GSP, jobs supported and personal earnings generated represent an important source of economic activity. However, the total magnitude of these economic benefits when accumulated over the extended length of the construction periods required to bring any of these generation alternatives on- line and then to maintain and operate these plants over their extended life span magnifies their long- term significance as a continuing source of impact on the state s economy. Total Economic Impacts The annualized economic impacts of construction and operation of the three generation alternatives that would accrue to the Commonwealth of Virginia were found to contribute varying but significant magnitudes of benefits to the state s Gross State Product and to be an important source of employment and labor income. While these annual economic impact associated with plant operations will continue over the life span of the plant, the economic benefits flowing from plant construction will end at the time construction is completed (7 years for the combined cycle natural gas, 13 years of the offshore wind farm, and 14 years of North Anna 3). These economic benefits accumulate over the respective construction periods in proportion to the total construction costs and the percentage of those outlays retained within the state s economy. These accumulated economic impacts over the construction period for each generation alternative are presented in Table 14 along with their annual outlays for operations that will recur over an extended period. For the combined cycle natural gas plant, with a total estimated construction cost of $1.32 billion and with Virginia- based businesses and workers capturing $701.4 million or 53.0 percent for these direct outlays over the seven- year construction period, the state s economy will realize a total economic impact (contribution to GSP) of $1.1 billion. These outlays will support a total of 9,240 full- time, year round equivalent jobs (1,320 annual jobs for seven years) with new personal earnings totaling $541.8 million over the construction period. Construction of the offshore wind farm would cost an estimated $14.4 billion over a thirteen- year period with Virginia- based business and labor capturing $5.7 billion or 39.6 percent of these outlays. These direct outlays over this construction period would generate a total economic impact contribution to GSP to the benefit of the Commonwealth of Virginia of $9.3 billion and support 60,892 full- time, year- round 15

17 equivalent jobs (4,684 annual jobs for 13 years) with new personal earnings totaling $4.2 billion over the construction period. Construction of the North Anna 3 plant would cost an estimated $13.8 billion over a fourteen- year period with Virginia- based business and labor capturing $10.1 billion or 73.0 percent of these outlays. These direct outlays over this construction period would generate a total economic impact contribution to GSP to the benefit of the Commonwealth of Virginia of $16.3 billion and support 128,940 full- time, year- round equivalent jobs (9,210 annual jobs for 14 years) with new personal earnings totaling $8.0 billion over the construction period. Table 14 Summary of Total Economic Impacts Three Generation Plant Alternatives: Construction and Operations (in billions of current year dollars) Generation Direct Outlays(1) Total Personal Jobs Alternative Total In Virginia Output(2) Earnings(3) Supported(4) Construction* Natural Gas $1,323.4 $701.4 $1,123.5 $ ,240 Wind 14, , , , ,892 Nuclear 13, , , , ,940 Operations** Natural Gas $11,545.9 $48.3 $78.7 $ Excl. fuel Wind 5, ,219 Nuclear 4, ,524 Excl. fuel 2, ,514 Sources: Dominion Virginia Power, Chmura Economics & Analytics, GMU Center for Regional Analysis. Notes: (1) total expenditures for construction and operations and the share of this total occurring within the Commonwealth; (2) contribution of direct outlays in Virginia to its gross state product; (3) gener- ation of new personal earnings (labor income) to workers residing within the Commonwealth from the direct outlays occurring in the State; (4) all jobs supported in the Commonwealth of Virginia over the full construction period and annually for operations as a result of the direct outlays occurring in the State and their subsequent re- spending (indirect and induced effects) within the state s economy. *construction outlays include soft costs (pre- construction design, engineering, planning, legal, management, financial, and regulatory) and hard- costs including on- and off- site materials, labor, equipment and management relating to the construction of the facility. **annual operating outlays and impacts 16

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