Access to affordable, reliable electricity is crucial to modern life. Electricity prices are a big deal for American families and businesses because higher energy prices can lead to severely negative economic consequences. A recent study commissioned by the National Rural Electric Cooperative Association (NRECA) assesses the impact of higher electricity rates on economic growth and employment by simulating a 10 percent and 25 percent increase in electricity prices.
The economic forecasting and analysis firm Regional Economic Models, Inc. (REMI) produced the study, which incorporates a two-region REMI-PI+computerized model to evaluate the rise in prices. The study illustrates the resulting impact on gross domestic product (GDP), jobs, and disposable personal income. In order to emphasize the impact that price increases have on rural America, the study compares the results for areas served by not-for–profit rural electric cooperatives (and their vicinity) alongside the results for the rest of the U.S.
The study reveals that higher electricity prices have a negative impact on jobs and economic growth: from 2020 to 2040, cumulative job losses in the U.S. range from 18.5 million to 31.3 million and national GDP cumulatively declines by $2.8 trillion to $5.4 trillion.
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Source: IER calculations of NRECA data, http://www.nreca.coop/wp-content/uploads/2015/07/
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