Vermont has excellent prospects for strong and sustained economic growth and a high quality of life if it can fashion a more prudent energy policy. This is a central conclusion in a recent report released by The New England Council, the nation's oldest regional business organization.
First, the good news.
The report, "Smart Infrastructure in New England: An Investment for Growth and Prosperity," finds that Vermont has an important structural advantage: a lower cost, high-skill subregion known as the I-91 Corridor. As a result, this area and two other regional corridors have "acceptable cost structures for industries making complex products and/or offering sophisticated services." This can be a catalyst for the creation of new businesses, quality jobs and business relocations, particularly from manufacturers and distribution facilities.
The I-91 corridor offers production costs, says the report, "only 4 to 5 percent higher than that for the same product made in the Southeast. Salaries are relatively comparable, and any cost differences come mainly from higher taxes and energy prices in the Northeast."
Unfortunately, energy is a glaring competitive weakness. As the report says, "New England's infrastructure lacks an energy resource that is both reliable and cost competitive. In fact, prices for energy in the region are double those of some southern U.S. states."
All six New England states are among the 10 most expensive for electricity rates in America, according to the U.S. Energy Information Administration. And recently, with the push to higher-priced, non-competitive, mandated renewable electricity sources, Vermont's electricity prices have increased considerably. EIA reports that for the 12 months ending Oct. 31, 2012, Vermont's electricity prices had risen 6.8 percent, more than any state east of the Mississippi. In fact, prices have declined or stayed the same in most states.
The New England Council report also makes clear that for economic and environmental reasons it is important to keep New England's four nuclear plants operating. New England needs its own sources of affordable, reliable, grid-friendly, low-carbon electricity -- an apt description for nuclear power. And because new power plant construction seems unlikely, New England must protect its assets, including Vermont Yankee.
As the report says, "The region's four nuclear power facilities generate 30 percent of its electric energy. Nuclear energy is the only local fuel source and plays a big role in maintaining fuel diversity. Just as important, low operating costs make nuclear power an economical choice. Nonetheless, it is unlikely that new plants will be built in New England in the future, while prices would likely rise if a current plant were decommissioned. This is the economic rationale for keeping nuclear facilities operating."
The Council's report also drives home the downside of closing nuclear power plants as regulation of carbon and other emissions increases. It says, "In addition to providing cost and reliability advantages, nuclear energy also plays an important role in attaining greenhouse gas reduction goals. Nuclear energy is an emission-free energy source, producing no carbon dioxide, nitrogen oxide, or sulfur dioxide. ... If nuclear power plants were closed, new sources of energy would need to be emission-free to continue to meet emissions standards."
The Council supports energy portfolio diversity, including renewables if shown to be cost-efficient, and recommends investment in transmission and natural gas generation. For Vermont, however, the most important "takeaway" from Smart Infrastructure is this: New England's future prosperity will benefit from the continued operation of Vermont Yankee.
Policy makers need to take us away from policies that lead to higher energy prices and undermine the region's competitiveness. Vermont can and should have a bright future, as the New England Council envisions. We also owe this to our children, so they can find the jobs, quality of life, and opportunities here in the Green Mountain state.
Guy Page is Communications Director for the Vermont Energy Partnership, a diverse group of more than 90 business, labor, and community leaders committed to finding clean, affordable and reliable electricity solutions. Entergy, owner of Vermont Yankee, is a member of the Vermont Energy Partnership. For information, visit www.vtep.org.