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Electricity Infrastructure Report Executive Summary Part 4

 Failure to Act Economic Studies | Electricity Infrastructure Full Report (PDF) 

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Substation in Tampa by timl2k11Estimate of Future Costs Incurred

A projected investment gap will be some combination of aging equipment and capacity bottlenecks that lead to the same general outcome—a greater incidence of electricity interruptions. The interruptions may occur in the form of equipment failures, intermittent voltage surges and power quality irregularities due to equipment insufficiency, and/or blackouts or brownouts as demand exceeds capacity for periods of time. The periods of time can be unpredictable in terms of frequency and length, but the end result is a loss of reliability in electricity supply which imposes direct costs to households and businesses.

A failure to meet the projected gap will cost households $6 billion in 2012, $71 billion by 2020, and $354 billion by 2040. It will cost businesses $10 billion in 2012, $126 billion by 2020, and $641 billion by 2040. Annual costs to the economy will average $20 billion through 2020 and $33 billion through 2040. It is notable that these estimated impacts are significantly lower than the impacts estimated from studies conducted in the 1990s and 2000s.

These costs incurred by failing to close the investment gap are higher than the investment itself. This means that it is economically inefficient for households and businesses to allow this higher cost scenario to occur. Even if sufficient investment is made to close the investment gap, the result will not be a perfect network for electricity generation and delivery, but rather one that has dramatically reduced, though not eliminated, power quality and availability interruptions.

Table 4 breaks down the estimated impact by region. These costs are not felt equally across the United States. Cumulative cost increases in the Southeast will be 30% of the total and costs in the West will be 22% of the total.

Table 4: Cumulative Impacts by Region 

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