UA Study: Controversial Clean Line Project To Have $660 Million Impact On Arkansas

Nov 19, 2015

A controversial electric transmission line project pushed by Houston-based Plains & Eastern Clean Line with the regulatory process challenged by members of Arkansas’ Congressional delegation would create a $660 million impact to Arkansas’ economy, according to a University of Arkansas report.

The research report, commissioned by Clean Line Energy Partners and conducted by the Center for Business and Economic Research at the UA Sam M. Walton College of Business, said most of the economic benefit will happen within a 30-month window as the transmission line is built in Arkansas.

The Plains & Eastern Clean Line is an approximately 700-mile-long direct current transmission line to deliver electricity from the Oklahoma panhandle to Arkansas, Tennessee and other states in the mid-South and southeast. In Arkansas, the 200-foot right-of-way enters in Crawford County north of Van Buren and travels below Alma and Dyer before dissecting Mulberry to follow a line with Interstate 40 through most of Franklin County. From there, the line travels through Johnson County, Pope County, northern Conway County, southern Van Buren County, southern Cleburne County, White County, Jackson County, Poinsett County, Cross County, and exiting Arkansas through Mississippi County north of Memphis. (Link here for more information on the route through Arkansas.)

CONSTRUCTION JOBS

According to the UA statement, the economic impact study analyzes the total economic activity generated by the construction of the transmission line and associated facilities, as well as the production of components such as transmission structures, conductor wire and insulators.

“The Plains & Eastern Clean Line project will generate over $180 million in total labor income and over $660 million of total economic output in Arkansas — a much needed boost for Arkansas workers, businesses and industry,” Kathy Deck, director of the Center for Business and Economic Research and principal author of the study, said in a statement. “Energy infrastructure projects like the Plains & Eastern Clean Line support the competitiveness of Arkansas manufacturers and generate jobs for new and established businesses in a wide variety of sectors.”

The key finding of the study is that construction of the Plains & Eastern Clean Line project in Arkansas will create an average of approximately 855 jobs during the 30-month construction period, along with indirect and induced creation of 693 jobs. In addition to the construction jobs, the operation of the Plains & Eastern Clean Line will create a demand for 41 permanent operations and maintenance jobs in Arkansas and 28 associated indirect and induced jobs, the study says.

The estimated portion of the project cost  in Arkansas is $657 million and an estimated $441 million of that total cost is assumed to be spent within the state on the manufacturing and construction of the line and converter station, noted the UA report.

Deck also noted in the report that the research does not include wind energy industry components made in Arkansas.

“While some significant portion of the wind turbine blades and other components will likely be  manufactured in Arkansas, it isn’t possible at this time to generate a precise estimate. Therefore, wind supply chain impacts in Arkansas are not included in this analysis,” noted the report.

REGULATORY FIGHT
Not everyone likes the deal. Opponents of the deal say Clean Line’s negotiated rate authority from the Federal Energy Regulatory Commission (FERC) will eventually be passed on to the backs of ratepayers. Critics also complain about a lack of transparency in presenting financials and plan details to potentially affected landowners. There’s also the eminent domain issue, which has property owners uncomfortable.

On Sept. 15, a week after the Department of Energy (DOE) staff provided an update on the status of the Clean Line project, Arkansas’ congressional delegation sent a letter to Energy Secretary Ernest Moniz asking him to address state’s rights concern over the DOE’s oversight of the multi-state, renewable energy project.

The letter, signed by U.S. Sens. John Boozman and Tom Cotton, R-Ark., and U.S. Reps. Rick Crawford, French Hill, Steve Womack and Bruce Westerman, outlined the Arkansas lawmakers’ opposition to the use of the DOE’s application process to approve the project. It also calls on DOE to legally justify its potential actions to approve the project that Clean Line officials hope to begin construction on by 2017.

“Again, we believe the project does not meet the statutory requirements of Section 1222, and state-level reviews of many serious concerns are necessary. Therefore, in our federal lawmaking and oversight role, we oppose the use of Section 1222 in this context and we urge you to disapprove it,” argued the six Arkansas Republican lawmakers.“We recognize that in many contexts the development of new electric transmission infrastructure is necessary despite costs and adverse impacts. We are not taking a position on whether this Project or any other should move forward under non-federal authorities.”

It was the second letter Arkansas’ congressional delegation sent to Moniz about the project. When first announced in 2010, Clean Line officials said the project would take five to seven years to complete. The company has also said it expects to fund all development costs, but does not plan to seek cost recovery through electric rates paid by consumers in the state.

CONGRESSIONAL RESPONSE TO THE UA REPORT

When asked about the UA economic impact report, Sen. Boozman said the issue is not the impact, but with the process and the potential cost to Arkansas ratepayers.

“Arkansans are not opposed to building needed infrastructure projects, but questions remain about whether this particular project is needed. No Arkansas utilities have signed up to purchase power from the line,” Boozman noted in a statement sent to Talk Business & Politics. “There are questions about the long-term benefits and costs to the state of Arkansas. Not only should a transmission project be necessary, but the state must be given an opportunity to review and approve it – just as it has always has in the past. When DC bureaucrats force a project on the state, as they have in this instance, the harm and costs may not be properly addressed.”

A statement from Rep. Womack’s office to Talk Business & Politics raised a question about who funded the UA study.

“Our concerns about the project are not based on whether Clean Line can commission a favorable study, but rather if the federal government should be able to supersede a state’s right to decide to license a utility and allow the use of eminent domain on behalf of a private company,” Womack said in the statement.

When asked about the perceived credibility of a study commissioned by Clean Line, Deck provided the following statement: “One of the things that our Center does for a wide variety of organizations is estimate economic impacts. Clean Line came to us to understand how its expenditures in Arkansas will affect the state’s economy. We very carefully looked at how much direct expenditure would be made and how the supply chain and personal expenditures that will result from that direct investment would impact the state. For this kind of study, there is no way to estimate economic impact without considerable input from the companies that are involved.  And, of course, companies are the most interested in understanding their own particular economic impact. So, for economic impact studies, you will almost always find that the economic impact generator is the funder of the work.

“As always, economic impact should be considered a single piece of the puzzle as we live in a complex world. But, it is an important piece.”