Information and issues related to the quantification of environmental externalities for new powerplants

This report provides background information for the Bonneville Power Administration (Bonneville) in its efforts to quantify the environmental externalities associated with new electricity resources. A more detailed companion document has been provided to Bonneville for internal use. This report defines what is meant by externalities, particularly in the context of electricity resources. It outlines the economics issues associated with assigning an economic value, such as cents per kilowatt hour, to the residual environmental impacts of electricity powerplants. It examines two generic theoretical approaches for estimating such values and discusses their advantages and disadvantages. The report also addresses the need to include relevant stages in the fuel cycle in estimating the costs of externalities. The fuel-cycle concept is defined and its importance is discussed. The approaches used by several states to quantify externalities are described. A review of the valuation efforts of various states and utilities indicates that three states have actually developed methodologies for assigning economic values to externalities. Information that Bonneville may need to request from resource developers to quantify externalities is discussed, and an appendix presents suggested forms for obtaining the required information. Summary information also is presented on models for analyzing the dispersion of powerplant plumes for the purpose of estimating environmental externality costs. 34 refs., 1 fig., 4 tabs.