Economic impacts of electric power deregulation on the State of Washington: A computable general equilibrium analysis

Computable General Equilibrium modeling has become an increasingly popular approach for policy analysis. Economists have long known that partial equilibrium analysis can have important limitations in trying to explain policy implications when income is endogenous to a particular set of markets. Computable general equilibrium modeling (CGE) can provide a framework that addresses issues where partial equilibrium analyses are insufficient and where exogenous price input-output models are not appropriate. This dissertation has two goals: describe the methodological and conceptual issues surrounding the adaptation of CGE modeling to regional economies or sub-national economies, and, develop a regional CGE model for the state of Washington, and apply the model to a discussion of impacts of deregulating electric power in the Northwest Power Pool on the State of Washington. The results of the study describe the potential impact of electric power deregulation on the State of Washington. The analysis shows that the price impacts of deregulation are complex but for the most part slightly positive. A substantial increase in the export price of BPA power increases the gross state product by 0.5 percent, and substantially improving the financial position of the BPA As a result there is a distributional impact as regional income is increased more through non-earned income than earned income.; Secondly, an analysis is conducted to assess the economic impacts of salmon recovery costs. The analysis considers the economic impacts of only salmon recovery costs, not potential benefits. The analysis shows that salmon recovery measures could cost the State anywhere from 0.2 percent to 0.6 percent of gross state product. Since potential benefits are not included in this analysis, the results are to be seen as a partial picture of the salmon recovery policy.