Thhe Ecconom
mic annd Fisscal Benefi
B
its of the
Thhetforrd CC
CNG Gener
G ratingg Faciility
Preppared For:
A
April
2013
TABLE OF CONTENTS
FORWARD ............................................................................................................................................................... i
EXECUTIVE SUMMARY ..................................................................................................................................... ii
INTRODUCTION ....................................................................................................................................................1
ECONOMIC AND FISCAL BENEFITS DEFINED..........................................................................................................1
Economic Benefits .............................................................................................................................................1
Fiscal Benefits ...................................................................................................................................................2
METHODOLOGY......................................................................................................................................................3
Geographic Interpretation .................................................................................................................................3
Categories of Impacts ........................................................................................................................................3
Project Parameters and Study Variables...........................................................................................................4
REPORT ORGANIZATION ........................................................................................................................................4
CONSTRUCTION BENEFITS ...............................................................................................................................5
DIRECT ECONOMIC AND FISCAL BENEFITS ............................................................................................................5
Construction Spending.......................................................................................................................................5
Transitory Worker Spending ..............................................................................................................................7
Fiscal Benefits ...................................................................................................................................................8
Total Direct Economic and Fiscal Benefits .......................................................................................................8
DIRECT, INDIRECT, AND INDUCED BENEFITS .........................................................................................................9
Michigan ............................................................................................................................................................9
Bay City – Detroit I-75 Corridor Region.........................................................................................................11
Genesee County ...............................................................................................................................................12
ON-GOING OPERATIONS BENEFITS .............................................................................................................13
DIRECT ECONOMIC AND FISCAL BENEFITS ..........................................................................................................13
Economic Benefits ...........................................................................................................................................13
Fiscal Benefits .................................................................................................................................................14
DIRECT, INDIRECT, AND INDUCED BENEFITS .......................................................................................................15
Michigan ..........................................................................................................................................................15
Bay City – Detroit I-75 Corridor Region.........................................................................................................16
Genesee County ...............................................................................................................................................17
SUMMARY .............................................................................................................................................................18
REFERENCES .......................................................................................................................................................21
ABOUT DEVELOPMENT RESEARCH PARTNERS ......................................................................................22
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
FORWARD
Building Clean, Natural Gas Power for Michigan……
That’s Our Promise
On December 14, 2012, Consumers Energy announced a $750 million investment for the construction of a new
natural gas combined cycle plant at its property in Thetford Township, Genesee County.
Utilizing state-of-the-art emissions control technologies, the proposed new plant is part of the Balanced Energy
Initiative, the utility’s plan to meet the electricity demands of its customers for the next 20 years.
Consumers Energy’s Balanced Energy Initiative includes a blend of existing resources with new energy options.
More energy efficiency, demand management, and renewable energy are part of the plan and will help further
diversify Michigan’s energy supply needs along with the additional natural gas generation.
The new natural gas generating plant provides flexible baseload generation, which is the most effective and
reliable resource for bridging a predicted “capacity gap” challenge that faces Michigan.
Consumers Energy announced late in 2012 plans to cease operations at seven of its smaller, older coal plants. This
is an additional factor necessitating the need for the new natural gas generating facility.
The proposed plant represents the latest technology in power plant design and will significantly help reduce
emissions in Michigan.
As well as helping secure the energy future for Michigan residents and businesses, the total (direct and indirect)
economic impact for the state from building the new plant is estimated at $320 million, including millions of
dollars in new tax revenue for the local area. The project is expected to create about 600 jobs during peak
construction and at least 30 permanent operating and support jobs when the plant is operational. In addition, about
1,960 indirect jobs are expected to be created for the region during the construction period as a result of this
investment.
These short- and long-term economic benefits, combined with greater energy security provided by a new natural
gas combined cycle plant, reflect Consumers Energy’s commitment to the residents of the Great Lakes State.
Building clean, natural gas power for Michigan. . . That’s our promise.
Consumers Energy
April 2013
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page i
EXECUTIVE SUMMARY
Consumers Energy is proposing the construction of a new combined cycle natural gas (CCNG) generating
facility. The facility will be built on an existing 230-acre Consumers Energy site in the Thetford Township of
Genesee County, Michigan, about 20 miles northeast of Flint. The Thetford CCNG Generating Facility (Thetford
facility), slated for construction to begin in 2014, will provide electricity to an estimated 445,000 customers.
The construction activity and annual operations of the Thetford facility will generate significant economic and
fiscal benefits through business purchases, the creation of high-paying jobs, and the payment of taxes and fees.
The intent of this study is to analyze the economic and fiscal benefits associated with the proposed construction
and projected operations of the new Thetford facility.
This analysis estimates the Thetford facility’s benefits on three geographic levels: the state of Michigan, the Bay
City - Detroit I-75 corridor region, and Genesee County. The Bay City - Detroit I-75 corridor region is defined as
a nine-county region consisting of Bay, Saginaw, and Genesee Counties and the Detroit-Warren-Livonia
metropolitan statistical area (Lapeer, Livingston, Macomb, Oakland, St. Clair, and Wayne Counties) and is
referred to as the I-75 corridor region. The economic benefits in the three geographic areas described in this report
are individual, non-additive impacts. Thus, the economic benefits estimated from this study should specify the
particular geography when reported.
Construction Benefits
The Thetford facility will cost an estimated $750 million dollars. This estimate consists of $286.2 million for
major capital equipment such as turbine units, cooling, and electrical equipment; $164 million for construction
materials, equipment, and fuel, including materials procured by subcontractors; $172.9 million of soft costs
including design, engineering, project management, and other soft costs; $11.1 million for subcontractors and
other services costs (except labor and materials); $105.6 million for construction labor; and nearly $10.3 million
of tax and fee payments for state and local governments.
In addition to construction spending, each study area will benefit from workers that will be required to travel to
the site from outside of the I-75 corridor region and Michigan. These workers are referred to as transitory
workers. These employees are expected to spend a significant amount of money in the study regions during the
course of the project for lodging, food, entertainment, and other goods and services.
Construction benefits are temporary benefits, occurring only during the construction period. The following values
reflect the total benefits over the three-year construction period.
Michigan
♦ The direct economic benefit of construction of the Thetford facility and transitory construction worker
spending in Michigan will be an estimated $140.7 million produced by 734 worker years, defined as one
person working full-time for one year. These workers will have estimated earnings totaling $77.7 million over
the three-year period. This activity will support an additional $179.6 million in output in all industries in
Michigan. The production of the $179.6 million in additional output will require about 1,963 indirect worker
years. These workers will have associated earnings of $74.8 million. All earnings values are included in the
total value of output; earnings are not in addition to the value of output.
♦ Combined, the construction of the Thetford facility will generate direct and indirect output in Michigan
over the three-year period valued at $320.3 million produced by 2,697 worker years (or an average of 900
workers per year) earning a total of $152.5 million.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page ii
EXECUTIVE SUMMARY
♦ In addition, the direct fiscal benefit in Michigan will be $10.2 million in sales and use and lodging tax
revenue from construction purchases and transitory worker spending.
Bay City – Detroit I-75 Corridor Region
♦ The direct economic benefit of construction of the Thetford facility and transitory construction worker
spending in the I-75 corridor region will be an estimated $109.9 million produced by 656 worker years
earning $67.4 million. This activity will support an additional $128.7 million in output in all industries
throughout the I-75 corridor region. The production of the $128.7 million in additional output will require
about 1,683 indirect worker years. These workers will have associated earnings of $62 million. All earnings
values are included in the total value of output; earnings are not in addition to the value of output.
♦ Combined, the construction of the Thetford facility will generate direct and indirect output over the threeyear period in the I-75 corridor region valued at $238.6 million produced by 2,339 worker years (or an
average of 780 workers per year) earning a total of $129.4 million.
Genesee County
♦ The direct economic benefit of construction of the Thetford facility and transitory construction worker
spending in Genesee County will be an estimated $5.5 million produced by 37 workers years earning $2.2
million. This activity will support an additional $3.1 million in output in all industries throughout the county.
The production of the $3.1 million in additional output will require about 34 indirect worker years. These
workers will have associated earnings of $1.1 million. All earnings values are included in the total value of
output; earnings are not in addition to the value of output.
♦ Combined, the construction of the Thetford facility will generate direct and indirect output over the threeyear period in Genesee County valued at $8.6 million produced by 71 worker years (or an average of 24
workers per year) earning a total of $3.3 million.
On-Going Operations Benefits
The Thetford facility is expected to begin operating in 2017. The economic and fiscal benefits of the facility’s
operations are estimated for a typical operating year, or those benefits that can be expected on an annual basis.
Typical annual operating expenditures (excluding fuel) for the Thetford facility will total an estimated $20.5
million each year. The expenditures include $2.5 million for general operating and maintenance expenditures,
$5.5 million for contract services, $4.5 million for payroll and employee benefits, and $8 million in property
taxes.
Michigan
♦ The direct economic benefit of the typical annual operations of the Thetford facility in Michigan will be an
estimated $6.9 million produced by 30 operating and support workers earning $3.4 million. The operating
activity will support an additional $4 million of output in all industries in Michigan. The production of the $4
million in additional output will require about 73 indirect workers. These workers will have associated
earnings of $2.6 million. All earnings values are included in the total value of output; earnings are not in
addition to the value of output.
♦ Combined, the typical annual operations of the Thetford facility will generate direct and indirect output in
Michigan each year valued at $10.9 million produced by 103 workers earning a total of $6 million.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page iii
EXECUTIVE SUMMARY
Bay City – Detroit I-75 Corridor Region
♦ The direct economic benefit of the typical annual operations of the Thetford facility in the I-75 corridor region
will be an estimated $6.5 million produced by 30 operating and support workers earning $3.4 million. The
operating activity will support an additional $3.7 million of output in all industries in the region. The
production of the $3.7 million in additional output will require about 73 indirect workers. These workers will
have associated earnings of $2.6 million. All earnings values are included in the total value of output.
Earnings are not in addition to the value of output.
♦ Combined, the typical annual operations of the Thetford facility will generate direct and indirect output in
the I-75 corridor region each year valued at $10.2 million produced by 103 workers earning a total of $6
million.
Genesee County
♦ The direct economic benefit of the typical annual operations of the Thetford facility in Genesee County will
be an estimated $2.5 million produced by 18 operating and support workers earning $2 million. The operating
activity will support an additional $877,000 of output in all industries in the county. The production of the
$877,000 in additional output will require about 28 indirect workers. These workers will have associated
earnings of $877,000. All earnings values are included in the total value of output. Earnings are not in
addition to the value of output.
♦ Combined, the typical annual operations of the Thetford facility will generate direct and indirect output in
Genesee County each year valued at $3.4 million produced by 46 workers earning a total of $2.9 million.
Fiscal Benefits
♦ Total annual property tax revenue from the Thetford facility will be an estimated $8 million benefiting
Genesee County, the Thetford Township, libraries, parks, health services, local schools, and other special
districts.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page iv
INTRODUCTION
In 2007, Consumers Energy developed a 20-year energy plan called the Balanced Energy Initiative (BEI), a guide
to providing energy resources and services to its customers in Michigan. The BEI includes expanded renewable
energy programs, energy efficiency and demand management programs, and new power generating plants. Part of
the BEI is the construction of a new combined cycle natural gas (CCNG) generating facility. The facility will be
built on an existing 230-acre Consumers Energy site in the Thetford Township of Genesee County, Michigan,
about 20 miles northeast of Flint. The Thetford CCNG Generating Facility (Thetford facility), slated for
construction to begin in 2014, will provide electricity to an estimated 445,000 customers. Currently, Consumers
Energy provides electricity to 1.8 million customers in Michigan.
Over the last several years, the price of natural gas has dropped considerably due to large new supplies and
sources, a boom that is occurring both nationally and globally. Low natural gas prices have generated renewed
interest for the resource as a fuel for electricity generation. Indeed, the Energy Information Administration (EIA)
notes that demand is shifting from the predominate use of natural gas as a residential and commercial heating fuel,
to use of natural gas in power plants, representing a structural shift in demand from historic norms. According to
the EIA, another benefit of natural gas is reduced carbon dioxide emissions as the use of natural gas in efficient
combined-cycle power plants emits much lower levels of CO2 than coal per unit of electricity output.1 Consumers
Energy projects a CCNG facility is an economical way to provide energy to its customers due to the generally
lower cost of constructing CCNG facilities, shorter construction period compared with coal plants, and the
benefits of competitive natural gas prices.
In addition to the benefit of the Thetford facility to Consumers Energy customers in Michigan, the construction
activity and operations of the facility will generate significant economic and fiscal benefits through business
purchases, high-paying jobs, and taxes and fees. The intent of this study is to analyze the economic and fiscal
benefits associated with the proposed construction and projected operations of the new Thetford facility.
Economic and Fiscal Benefits Defined
Economic Benefits
Economic impact analysis is the analytical approach used to assess the measurable direct and indirect benefits
resulting from a project over a specific period. Only those benefits that can be measured or quantified are
included. Intangible benefits, such as enhancement of community character or diversification of the job base, are
not included. Further, economic impact analysis highlights that activity which occurs within a specified
geographic area. This analysis estimates the Thetford facility impacts on three geographic levels: the state of
Michigan, the Bay City - Detroit I-75 corridor region, and Genesee County.
The economic and fiscal benefits estimated in this analysis highlight two categories of impacts and activities,
consisting of the construction of the Thetford facility and the on-going business operations once completed. The
spending patterns associated with the construction and operations of the Thetford facility have spin-off effects or
multiplicative impacts in the county and state. Therefore, multiplier analysis is used to trace the impacts on
businesses, organizations, and individuals affected by the construction activity and on-going operations.
The multiplicative impacts are discussed in terms of “indirect” and “induced” economic benefits (often
collectively referred to as simply indirect benefits). For example, when Consumers Energy purchases supplies
from a local vendor, that local vendor provides payroll to its employees and makes purchases from other vendors.
1
For more information reference the Energy Information Administration’s natural gas webpage, the February 2013 Natural
Gas Short-Term Energy Outlook, and the International Energy Outlook 2011, http://www.eia.gov/naturalgas.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 1
INTRODUCTION
These other vendors in turn provide payroll to their employees, and so on, providing the indirect benefit of the
initial dollar spent. On a separate but similar spending track, when Consumers Energy employees working at the
Thetford facility spend their paychecks at local businesses, these local businesses provide payroll to their
employees, make purchases from other vendors, and so on, creating the induced benefit.
As a result, the initial dollars spent by Consumers Energy for construction, business purchases, or employee
compensation will be circulated throughout the local economy a number of times. The number of times that the
initial dollars will be circulated throughout the local economy may be estimated using economic multipliers. An
economic multiplier summarizes the total impact that can be expected within a specific geographic area due to a
given industry’s level of business activity. Generally, larger multipliers are associated with industries that (1)
spend more dollars locally, (2) pay high salaries, and/or (3) sell their goods and services outside of the local area.
The indirect and induced jobs and income flows generated by the direct local spending patterns are estimated
using the Regional Input-Output Modeling System II (RIMS II) multipliers developed by the Bureau of Economic
Analysis of the U.S. Department of Commerce. The RIMS II multipliers are the most widely used and respected
for economic impact analysis. These multipliers are geographic and industry specific, and are used to estimate the
total benefits of a project.
Three types of economic benefits derived from the RIMS II multipliers are discussed for each study region. First,
the direct and indirect impact of the construction and operations on the gross output of the region is estimated.
This is the total value produced by local firms and residents resulting from the value of the output produced by an
industry directly. Gross output consists of the value of both intermediate goods and final products, so this is a
larger value than gross domestic product (GDP) for each region. Second, the total direct and indirect employment
needed in the region to produce this level of output is determined. These employees may be full-time or part-time,
local or non-local workers. It should be noted that the indirect employment supported might represent fractions of
jobs, added to reflect whole positions. Third, the analysis presents an estimate for the typical direct and indirect
earnings associated with this level of production.
Fiscal Benefits
Fiscal impact analysis estimates the direct public revenues and public costs resulting from a project over a specific
time period. A project may generate a broad array of public revenues ranging from sales tax, use tax, property tax,
franchise fees, licenses and permits, and other charges for services. In turn, local governments provide a variety of
public services such as police protection, public works, community social and recreational programs, and
community development services, to name a few.
This report includes a limited fiscal impact analysis, including direct public revenue estimates only from sales tax,
lodging tax, property tax, fees, permits, and licenses. In other words, the analysis includes the governmental taxes
and fees paid by Consumers Energy due to the Thetford facility’s construction activity, business spending, and
operations. The sales tax revenue and lodging tax revenue estimates are based on current sales and use tax rates
and tax policies for the state of Michigan. Property tax estimates are based on the value of real and personal
property of the Thetford facility. Fee revenue for permits, inspections, and licenses are estimated at the township
level.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 2
INTRODUCTION
Methodology
Geographic Interpretation
This analysis estimates the Thetford facility’s benefits on three geographic levels: the state of Michigan, the Bay
City - Detroit I-75 corridor region, and Genesee County. The Bay City - Detroit I-75 corridor region is defined as
a nine-county region consisting of Bay, Saginaw, and Genesee Counties and the Detroit-Warren-Livonia
metropolitan statistical area (Lapeer, Livingston, Macomb, Oakland, St. Clair, and Wayne Counties) and is
referred to in the report as the I-75 corridor region. The economic benefits in the three geographic areas described
in this report are individual, non-additive impacts. For example, the economic benefits reported for the I-75
corridor region are not in addition to the state of Michigan benefits, but are a component of the economic benefits
in the state of Michigan. Similarly, the economic benefits reported for Genesee County are not in addition to the I75 corridor region benefits, but are a component of the benefits in the I-75 corridor region. Thus, the economic
benefits estimated from this study should specify the particular geography when reported.
The fiscal benefits reported in this study are narrower in concept. The three geographic areas analyzed in this
study either represent a single governmental entity or consist of several government entities. The fiscal benefits
are discrete to each level of government. For example, Consumers Energy will be paying property tax for the
Thetford facility. The property tax revenues will benefit several different taxing entities providing governmental
services to the facility. While any property tax received by Genesee County for county services benefits its
residents, who are also residents of the state, Genesee County property tax revenue is only counted as a direct
fiscal benefit to the county, not the state of Michigan as a whole. Thus, the fiscal benefits estimated in this study
should specify the particular governmental entity when reported.
The total output, employment, and earnings from the construction and operations of the Thetford facility are
estimated using the RIMS II multipliers at a state, regional, and county level. As a result, this analysis only
includes multiplier impacts for the state of Michigan, the I-75 corridor region, and Genesee County. Multiplier
effects also occur at the local level such as a township or municipality. These effects are a part of the multiplier
effects estimated for the larger areas, however the specific amount of these effects cannot be separated from the
county numbers and are not included for this reason.
Categories of Impacts
The economic and fiscal benefits for this analysis were calculated within the framework of two categories of
impacts and activities, construction activity and on-going business operations.
Construction impacts focus on the benefits of spending on materials, labor, and other costs for the project, and the
benefits of transitory workers who will travel to the site from outside of the region and will spend money locally.
Construction impacts are one-time impacts, meaning that the benefit of construction activity accrues only in the
years in which construction activity occurs. If there is no construction activity in a given year, there are no
associated economic and fiscal benefits.
The impacts of on-going operations for this analysis were based on the operational costs of the Thetford facility
for a “typical” year of operations. For this study, Consumers Energy supplied projections of its operations that
were determined to be representative of benefits that could be expected on an annual basis. It should be noted that
operating expenses are likely to vary from year to year.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 3
INTRODUCTION
Project Parameters and Study Variables
Development Research Partners estimated the economic and fiscal benefits described in this report based on
primary data supplied by Consumers Energy. When necessary, data from a variety of standard secondary sources
was used, including the U.S. Bureau of Labor Statistics, U.S. Bureau of Economic Analysis, U.S. Census Bureau,
state of Michigan, and others. Development Research Partners made every attempt to collect necessary additional
or missing information and believes the information used in this report is from sources deemed reliable but is not
guaranteed.
It should be noted that suppliers and contractors for the construction of the facility have yet to be finalized. In
addition, while Consumers Energy has provided projections and estimates of the operations of the Thetford
facility, the plant has yet to be constructed and plans for its operation have yet to be finalized. Changes in
suppliers and other variables for the construction and operation of the Thetford facility may change the benefits
reported in this study. The parameters used in this impact analysis were carefully considered and selected to
accurately report and avoid overstating potential economic and fiscal benefits. However, the economic and fiscal
benefits estimated in this report are entirely dependent on the project assumptions and are not guaranteed.
Some numbers in the study may not add exactly due to rounding. In general, numbers reported in the text of the
report are rounded to the nearest hundred thousand if over $1 million. Figures that are less than $1 million are
rounded to the nearest thousand. This analysis considers the economic and fiscal benefits in nominal dollars,
meaning the cost of escalation is included in the values for construction and operations. That is, the cost of the
project is stated as the actual dollar cost during the future year. However, employment benefits were estimated in
2012 dollars so as not to overstate employment.
Report Organization
Following the Introduction, the next two sections of the report describe the economic and fiscal benefits of the
construction of the Thetford facility and the typical annual operations of the facility once construction is
completed.
Each section is further divided into the direct economic and fiscal benefits of the project, followed by the total
economic benefits once multiplier effects are considered. Multiplier effects include the indirect and induced
impacts on output, employment, and earnings supported by the direct spending from the construction activity and
operations for Michigan, the I-75 corridor region, and Genesee County.
The construction and operations of the Thetford facility will have significant benefits on various local suppliers in
the region. These categories of direct and indirect benefits are combined to establish the overall economic and
fiscal benefits of the Thetford CCNG Generating Facility. These final total values are included in the Summary
section of the report.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 4
CONSTRUCTION BENEFITS
Construction of the Thetford facility is slated to begin mid-2014. The Thetford facility will be built on a 230-acre
property owned by Consumers Energy adjacent to an existing facility. Construction activity will peak from fall
2015 to spring 2016, with completion expected by summer 2017. At buildout, the Thetford facility will have a
gross megawatt (MW) rating of about 700 MW.
Direct Economic and Fiscal Benefits
The Thetford facility will cost an estimated $750 million dollars. This estimate consists of $286.2 million for
major capital equipment such as turbine units, cooling, and electrical equipment; $164 million for construction
materials, equipment, and fuel, including materials procured by subcontractors; $172.9 million of soft costs
including design, engineering, project management, and other soft costs; $11.1 million for subcontractors and
other services costs (except labor and materials); $105.6 million for construction labor; and nearly $10.3 million
of tax and fee payments for state and local governments.
Construction Spending
♦ The major capital equipment purchases of $286.2 million comprise about 38 percent of the total construction
cost. While suppliers of the major turbine generator units and other equipment have yet to be finalized, most
suppliers are located either out-of-state or outside of the U.S. Indeed, Consumers Energy expects that all of
this equipment will be purchased outside of Michigan.
♦ Construction materials, equipment, and other purchases totaling $164 million include concrete and aggregate
for the foundation and site preparation, piping, electrical equipment, metal supports, and building materials.
Consumers Energy estimates that Michigan-based suppliers will capture an estimated $29.2 million of these
purchases. Based on an analysis of the distribution of likely supplier industries within Michigan from
Hoover’s business data, about 62 percent, or $18.1 million in spending, will likely be transacted in the I-75
corridor region. Of the $18.1 million spent in the I-75 corridor region, suppliers located in Genesee County
may capture an estimated $1.1 million.
♦ Spending on the project’s soft costs including design, engineering, and planning of the facility, a warranty
reserve, accounting, fees, and project management will cost an estimated $172.9 million. Based on prior
Consumers Energy spending patterns, Michigan firms are likely to capture about 14 percent or $24.6 million
of these costs. Of the amount spent in Michigan, about 71 percent is likely to be transacted in the I-75 corridor
region based on Hoover’s business data, or an estimated $17.4 million. Genesee County will capture a small
portion of this spending, an estimated $576,000.
♦ The study areas will benefit from spending on subcontractors and other services. Estimated spending for these
services, excluding the costs of materials and labor, is about $11.1 million.2 According to estimates from
Consumers Energy, Michigan will capture a large portion of this spending, an estimated $8.6 million. Based
on Hoover’s business data, $5.7 million will likely be spent in the I-75 corridor region and $196,000 in
Genesee County.
♦ Construction of the Thetford facility will require about 1.4 million hours of work. Construction employment
is expected to peak at about 500 workers in 2016. Additionally, Consumers Energy will have between 50 and
100 of its own staff and consultants working on the project. During the three-year construction period, the
2
Materials and construction labor costs for the subcontractors and other services are included in the materials and labor
categories of the analysis.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 5
C
CONS
STRUCTIO
ON BE
ENEFIITS
project wiill require abo
out 792 workeer years, definned as one peerson workingg full-time forr one year. Thhis
representss an average of
o about 264 workers
w
per year.
y
Consum
mers Energy will
w negotiate with
w craft labbor unions
and other subcontracto
ors in the statee to find laborr for the projeect and expectts that nearly all of the workers will
be Michiggan residents. This study assumes aboutt 90 percent of
o the craft labbor and 100 percent
p
of the
Consumerrs Energy em
mployees, or abbout 725 worrker years, will be filled byy Michigan reesidents. Accoording to
data from
m the U.S. Cen
nsus Bureau’ss Local Emplooyment Dynaamics, 88 perccent of emplooyees in the I--75
corridor reegion also liv
ve within the region.
r
Basedd on these com
mmuting patteerns, an estim
mated 635 of the
t
worker yeears will be filled by resideents of the I-775 corridor reggion. Based on
o the locationn of employees within
the I-75 corridor region
n for workerss in the powerr and communnication systeem constructioon industry frrom the
U.S. Bureeau of Labor Statistics,
S
Quarterly Censuus of Employm
ment and Wagges, about 18 of the workeer years
will be fillled by residen
nts of Geneseee County.
Crafft Labor Scheedule for thee Thetford CCNG Generaating Facilityy
Source:: Consumers Energgy
♦ The cost of
o labor for co
onstruction off the Thetfordd facility incluuding all wagges, salaries, and
a employeee benefits
is an estim
mated $105.6 million, or ann average annnual wage of $93,600
$
plus about $40,7000 in employeee
benefits. Narrowing
N
co
ompensation to
t just the bennefit of earninngs likely to be
b spent in Michigan or loccally, the
earnings impact
i
in the state is an esttimated $77.55 million.3 Ann estimated $666.9 million in
i earnings wiill be paid
to workerrs residing in the
t I-75 corriidor region including $1.8 million beneffiting Genesee County resiidents.
3
Earnings impaacts are based on the portion of total compeensation (includding wages, saalaries, and bennefits) that is likkely to be
sspent locally annd includes waages and salariees, paid leave, and
a supplemenntal pay. Healthh insurance bennefits are also included
Consumers En
nergy
F
Beneffits of the Thhetford CCN
NG Generatinng Facility
Ecconomic & Fiscal
Page 6
CONSTRUCTION BENEFITS
Transitory Worker Spending
The Thetford facility construction will require workers that travel to the site from outside of the I-75 corridor
region and Michigan. These workers are referred to as transitory workers. These employees are expected to spend
a significant amount of money in the study regions during the course of the project for lodging, food,
entertainment, and other goods and services.
♦ The Thetford facility construction will involve an estimated 792 worker years over the three-year construction
period. The economic benefit in Michigan of 91.5 percent of these workers is included in the benefits of the
labor costs described in the Construction Spending section. The remaining 67 workers will travel to the site
from outside Michigan and are transitory workers during the construction period. While the earnings of the
transitory workers do not count as a direct benefit to the study regions, the lodging and retail spending of
these workers do represent additional benefits to the state. Based on the reimbursement rates set by the U.S.
General Services Administration for the area, the transitory workers will spend an average of $46 per day for
meals and incidental expenses (excluding lodging). The additional benefit in Michigan of transitory worker
spending will be an estimated $801,000 for food, entertainment, and other expenditures. Adjusting this
spending to reflect only the retailer margin of 27 percent (retail spending less cost of goods sold), yields an
estimated retailer benefit of $219,000.
♦ Michigan will also benefit from the out-of-state worker spending on lodging. Transitory workers will often
use a variety of lodging options, including hotels/motels, RV parks, and apartments. This analysis assumes
that 50 percent of the worker days will be captured in apartments and 50 percent will be captured in
hotels/motels in the area. Michigan will capture an estimated 5,810 room nights of demand in hotels/motels
based on an average of 1.5 persons per room and will capture 270 rental months in area apartments based on
1.5 persons per apartment. Based on an average room rate for hotels/motels of $64.18 per night and average
rent for apartments of $570 per month, the additional benefit to Michigan from transitory worker spending on
lodging is an estimated $525,000.
Note that the same assumptions for hotel versus apartment lodging, persons per room, and lodging and rental
rates were also used for the analysis of transitory worker spending in the I-75 corridor region and Genesee
County below.
♦ Transitory worker spending will also benefit the I-75 corridor region. Transitory workers benefiting the I-75
corridor region are defined as workers that do not reside in the region. In addition to the 67 out-of-state
workers, about 11 percent (90 workers) will travel to the I-75 corridor region from various parts of Michigan.
While the earnings benefit of these workers is included in the labor benefits to the state, they are not included
in the labor benefits to the region. Instead, the additional benefit to the region of spending from transitory
workers is included, totaling about $1.9 million. Adjusting this spending to reflect only the retail margin
yields an estimated retailer benefit of $514,000.
♦ Based on the same assumptions outlined for the state, businesses within the I-75 corridor region will benefit
from about 13,610 room nights of demand from transitory workers in area hotels/motels and 630 rental
months in area apartments. The benefit of transitory worker spending on lodging is an estimated $1.2 million.
for the state and I-75 corridor region. Earnings were estimated based on data from the U.S. Bureau of Labor Statistics,
National Compensation Survey.
Consumers Energy
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CONSTRUCTION BENEFITS
♦ All of the 157 workers traveling to the I-75 corridor region from either out-of-state or other areas of Michigan
are assumed to stay in Genesee County lodging facilities. In other words, the entire transitory worker
spending benefit to the I-75 corridor region occurs in Genesee County. All of the workers from within the I75 corridor region will likely commute back and forth daily and are not included in the benefits to the county.
The additional benefit to Genesee County of spending from transitory workers will total about $1.9 million.
Adjusting this spending to reflect only the retail margin yields an estimated retailer benefit of $514,000.
♦ Businesses within Genesee County will benefit from 13,610 room nights of demand from transitory workers
at area hotels/motels and 630 rental months in area apartments. The benefit of transitory worker spending on
lodging is an estimated $1.2 million.
Fiscal Benefits
Fiscal benefits from the construction of the Thetford facility include state sales and use taxes and township-level
revenue in Genesee County. The estimated fiscal benefits are as follows:
♦ Consumers Energy estimates sales and use tax revenue for the state of Michigan for materials and other
construction purchases will total an estimated $10.1 million.
♦ Transitory worker spending will generate sales and use tax and lodging tax revenue for the state. Based on the
6 percent sales and use tax rate and 6 percent lodging use tax rate in the state, sales and use tax revenue from
transitory worker spending will generate about $70,000 in revenue during the construction of the Thetford
facility.
♦ Consumers Energy estimates that permits and fee revenue to the Thetford Township will total about
$145,000. While the Thetford Township is not one of the study regions for the economic analysis, this
revenue will be a significant local fiscal benefit to the area.
Total Direct Economic and Fiscal Benefits
The total direct economic and fiscal benefits of constructing the Thetford facility in Michigan will be an estimated
$150.9 million over the three-year construction period, including all materials and services, planning, labor, and
transitory worker spending benefits. This includes a direct fiscal benefit of $10.1 million in sales and use tax
revenue from business purchases and $70,000 from transitory worker spending. The direct benefits in the I-75
corridor region will be $109.9 million and the direct benefit to Genesee County is an estimated $5.4 million.
The economic and fiscal benefits of the construction activity are temporary impacts, occurring only during the
construction period.
Consumers Energy
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CONSTRUCTION BENEFITS
Table 1: Direct Economic and Fiscal Benefits of Construction Activity of Thetford Generating Facility
Bay City-Detroit
I-75 Corridor*
Michigan
$1,110,000
$576,000
$196,000
$1,605,000
$163,000
$3,650,000
18
$18,111,000
$17,406,000
$5,678,000
$57,985,000
$8,932,000
$108,112,000
635
$29,234,000
$24,631,000
$8,645,000
$67,150,000
$10,344,000
$140,004,000
725
$1,231,000
$514,000
$1,745,000
157
$1,231,000
$514,000
$1,745,000
157
$525,000
$219,000
$744,000
67
$739,737,000
$5,395,000
$109,857,000
$140,748,000
$10,116,000
$145,000
$10,261,000
----$0
----$0
$10,116,000
$48,000
$22,000
-$10,186,000
$749,998,000
$5,395,000
$109,857,000
$150,934,000
Total Genesee County
Direct Economic Benefits
Construction Benefits
Major Equipment and Materials
Design, Engineering, Planning, Other Costs
Subcontracting/Services (Except Materials and Labor)
Payroll
Employee Benefits (Earnings Portion)
Total Construction Benefits
Construction Employees (Work-Years)
$450,182,000
$172,898,000
$11,067,000
$73,385,000
$32,205,000
$739,737,000
792
Transitory Worker Spending
Lodging and Apartments
Retailer Impacts**
Total Transitory Worker Spending Benefits
Transitory Workers From Out of Local Government (Work-Years)
Total Direct Economic Benefits of Construction
Direct Fiscal Benefits
Sales and Use Tax on Construction Purchases
Sales Tax on Transitory Worker Retail Purchases
Lodging Use Tax
Fees and Permits***
Total Fiscal Benefits
Total Direct Economic and Fiscal Benefits
*T he Bay City-Detroit I-75 Corridor region is defined as Bay, Saginaw, and Genesee Counties and the Detroit-Warren-Livonia Metropolitan Statistical Area.
**Retail margin after subtracting the cost of goods sold and freight. Based on total retail spending of $1.7 million in Genesee County and the I-75 corridor region, and
$825,000 in Michigan.
***Permit fee revenue established at the township level, or in this case for T hetford T ownship.
Direct, Indirect, and Induced Benefits
The construction activity will have temporary multiplicative impacts on the county, regional, and state economies
during the three-year construction period. Multiplicative impacts are based on the value of output, or revenues
received in various affected industries from the construction expenditures and the transitory worker spending.
These industries include the construction industry, the retail trade industry, the hotels and motels industry, and the
real estate, rental, and leasing industry.
Michigan
♦ Value of Output: The total direct value of output associated with the Thetford facility includes $140 million
in construction spending and $1.3 million in transitory worker spending in Michigan. Note that the entire $1.3
million in transitory worker spending ($525,000 lodging + $801,000 retail) does not have multiplier impacts
in Michigan. Based on an analysis of the retail margins associated with worker spending on retail categories,
only about 27 percent of the retail spending actually goes towards local wages and indirect business
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
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CONSTRUCTION BENEFITS
purchases. The remaining 73 percent received by the retailers represents the cost of goods sold, dollars that
generally exit the region as retailers pay for their inventory. Combining the retail spending with 100 percent
of the lodging spending yields a total direct benefit of transitory worker spending of $744,000.
Based on the RIMS II multipliers, $140.7 million of construction and transitory worker spending will likely
support $179.6 million in additional output in all industries throughout the state. This consists of the value of
local spending of the construction workers (the induced benefit) and the local supplier companies and their
employees (the indirect benefit). Therefore, the total direct and indirect benefit of construction of the Thetford
facility is $320.3 million in total output ($140.7 million direct output + $179.6 million indirect and induced
output), as shown in Table 2.
♦ Employment: During the three-year buildout period, construction of the Thetford facility will directly employ
about 725 construction worker years filled by residents of Michigan. Transitory worker spending will result in
the direct employment of nine workers in the state. The production of the $179.6 million in indirect and
induced output in all industries throughout the state will require about 1,963 worker years. Therefore, the
construction of the Thetford facility will support the employment of 2,697 worker years in Michigan (734
direct employees + 1,963 indirect employees), or an average of about 900 workers per year, as shown in
Table 2.
Table 2: Total Economic Benefit of Thetford Generating Facility
Construction Activity in Michigan
Direct Impact
Multiplier
Indirect &
Induced Impact
Total Impact
$140.0
$77.5
725
2.2786
1.9622
3.7010
$179.0
$74.6
1,958
$319.0
$152.1
2,683
$0.7
$0.2
9
1.8281
1.9161
1.5705
$0.6
$0.2
5
$1.3
$0.4
14
$179.6
$74.8
1,963
$320.3
$152.5
2,697
Construction Activity
Value of Output ($M)
Earnings ($M)
Employment
Transitory Worker Spending
Value of Output ($M)
Earnings ($M)
Employment
Total Economic Benefit
Value of Output ($M)
Earnings ($M)
Employment
$140.7
$77.7
734
Calculation Note: Direct x Multiplier = Total Impact
Total Impact - Direct Impact = Indirect & Induced Impact
♦ Earnings: The direct benefit of construction worker earnings in the state will total about $77.5 million.
Employees directly supported by transitory worker spending will have associated earnings of about $197,000.
The 1,963 indirect employees that produce the $179.6 million in indirect and induced output have associated
earnings of about $74.8 million. As a result, the 2,697 direct and indirect employees have estimated earnings
of $152.5 million ($77.7 million direct earnings + $74.8 million indirect earnings), as shown in Table 2. All
earnings values are included in the total value of output; earnings are not in addition to the value of output.
Consumers Energy
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CONSTRUCTION BENEFITS
Bay City - Detroit I-75 Corridor Region
♦ Value of Output: The total direct value of output includes $108.1 million in construction spending and $3.1
million in transitory worker spending ($1.2 million lodging + $1.9 million retail) in the I-75 corridor region.
Accounting for the retail margin associated with the transitory worker spending (27 percent) and the full value
of the lodging spending yields a total direct benefit of $1.8 million.
The direct output of $109.9 million in industries affected by the construction and transitory worker spending
activity in the I-75 corridor region will support $128.7 million in additional output in all industries throughout
the region. Therefore, the total direct and indirect benefit of construction of the Thetford facility is $238.6
million in total output ($109.9 million direct output + $128.7 million indirect and induced output), as shown
in Table 3.
♦ Employment: During the three-year buildout period, construction of the Thetford facility will directly employ
about 635 construction worker years filled by residents of the I-75 corridor region. Transitory worker
spending will result in the direct employment of another 21 workers. The production of the $128.7 million in
indirect and induced output in all industries throughout the region will require about 1,683 worker years.
Therefore, the construction of the Thetford facility will support the employment of 2,339 worker years in the
I-75 corridor region (656 direct employees + 1,683 indirect employees), or an average of about 780 workers
per year, as shown in Table 3.
♦ Earnings: The direct benefit of construction worker earnings in the I-75 corridor region will total about $66.9
million. Employees directly supported by transitory worker spending will have associated earnings of about
$457,000. The 1,683 indirect employees that produce the $128.7 million in indirect and induced output have
associated earnings of about $62 million. As a result, the 2,339 direct and indirect employees have estimated
earnings of $129.4 million ($67.4 million direct earnings + $62 million indirect earnings), as shown in Table
3.
Table 3: Total Economic Benefit of Thetford Generating Facility
Construction Activity in the Bay City-Detroit I-75 Corridor Region
Direct Impact
Multiplier
Indirect &
Induced Impact
Total Impact
$108.1
$66.9
635
2.1763
1.9216
3.6308
$127.2
$61.7
1,671
$235.3
$128.6
2,306
$1.8
$0.5
21
1.8390
1.9295
1.5826
$1.5
$0.3
12
$3.3
$0.8
33
$128.7
$62.0
1,683
$238.6
$129.4
2,339
Construction Activity
Value of Output ($M)
Earnings ($M)
Employment
Transitory Worker Spending
Value of Output ($M)
Earnings ($M)
Employment
Total Economic Benefit
Value of Output ($M)
Earnings ($M)
Employment
$109.9
$67.4
656
Calculation Note: Direct x Multiplier = Total Impact
Total Impact - Direct Impact = Indirect & Induced Impact
Consumers Energy
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CONSTRUCTION BENEFITS
Genesee County
♦ Value of Output: The total direct value of output includes $3.7 million in construction spending and $3.1
million in transitory worker spending ($1.2 million lodging + $1.9 million retail) in Genesee County.
Accounting for the retail margin associated with the transitory worker spending (27 percent) and the fullvalue of the lodging spending yields a total direct benefit of $1.8 million.
The direct output of $5.5 million in industries affected by the construction and transitory worker spending
activity in Genesee County will support $3.1 million in additional output in all industries throughout the
county. Therefore, the total direct and indirect benefit of construction of the Thetford facility is $8.6 million
in total output ($5.5 million direct output + $3.1 million indirect and induced output), as shown in Table 4.
♦ Employment: During the three-year buildout period, construction of the Thetford facility will directly employ
about 18 construction worker years filled by residents of Genesee County. Transitory worker spending will
result in the direct employment of another 19 workers. The production of the $3.1 million in indirect and
induced output in all industries throughout the county will require about 34 worker years. Therefore, the
construction of the Thetford facility will support the employment of 71 worker years in Genesee County (37
direct employees + 34 indirect employees), or an average of about 24 workers per year, as shown in Table 4.
♦ Earnings: The direct benefit of construction worker earnings in Genesee County will total about $1.8 million.
Employees directly supported by transitory worker spending will have associated earnings of about $416,000.
The 34 indirect employees that produce the $3.1 million in indirect and induced output have associated
earnings of about $1.1 million. As a result, the 71 direct and indirect employees have estimated earnings of
$3.3 million ($2.2 million direct earnings + $1.1 million indirect earnings), as shown in Table 4.
Table 4: Total Economic Benefit of Thetford Generating Facility
Construction Activity in Genesee County
Direct Impact
Multiplier
Indirect &
Induced Impact
Total Impact
Construction Activity
Value of Output ($M)
Earnings ($M)
Employment
$3.7
$1.8
18
1.6127
1.5136
2.4992
$2.2
$0.9
27
$5.9
$2.7
45
Transitory Worker Spending
Value of Output ($M)
Earnings ($M)
Employment
$1.8
$0.4
19
1.4970
1.5069
1.3480
$0.9
$0.2
7
$2.7
$0.6
26
Total Economic Benefit
Value of Output ($M)
Earnings ($M)
Employment
$5.5
$2.2
37
$3.1
$1.1
34
$8.6
$3.3
71
Calculation Note: Direct x Multiplier = Total Impact
Total Impact - Direct Impact = Indirect & Induced Impact
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 12
ON-GOING OPERATIONS BENEFITS
The Thetford facility is expected to begin operating in 2017. This section describes the economic and fiscal
benefits of the facility’s operations for a typical operating year, or those benefits that can be expected on an
annual basis. The actual benefits described in this section will vary from year to year based on normal fluctuations
in employment and expenditures for the plant. For instance, the Thetford facility will undergo routine
maintenance and inspections that will bring a temporary influx of workers into the area. Descriptions of these
shifting variables are discussed in this section where applicable to recognize the benefits that can be expected on
average.
Direct Economic and Fiscal Benefits
Typical annual operating expenditures (excluding fuel) for the Thetford facility will total an estimated $20.5
million each year. The expenditures include $2.5 million for general operating and maintenance expenditures,
$5.5 million for contract services, $4.5 million for payroll and employee benefits, and $8 million in property
taxes. The following benefits will occur annually, assuming similar business operations and tax structures.
Economic Benefits
♦ Operating and maintenance expenditures for the Thetford facility, including equipment maintenance and
modifications and other non-labor costs, will be about $2.5 million each year. Consumers Energy estimates
that Michigan-based suppliers are likely to capture all of these purchases. Based on expected spending
patterns, over 80 percent of these purchases, or an estimated $2 million, will potentially be transacted with
businesses and suppliers within the I-75 corridor region. Of the $2 million spent in the I-75 corridor region,
suppliers located in Genesee County will likely capture about $520,000.
♦ A large portion of the facility’s expenditures will be for contract services required for the plant’s regular
outages. On an annual basis, the estimated cost of these services is $5.5 million. The specialized nature of
these services will require that the majority of these costs will be transacted outside of Michigan. However,
$1.1 million or an estimated 20 percent of these costs are expected to be transacted within the state. Nearly all
of the state expenditures will be with businesses and companies located within the I-75 corridor region. These
purchases are not likely to be captured in Genesee County.
♦ Purchases of natural gas or fuel for the Thetford facility are not included in the operating purchases described
herein. Fuel for the Thetford facility will be purchased outside of the state and is not included in the economic
benefits for the state, region, or county.
♦ On-going operation of the Thetford facility will require about 30 operating and support employees. Wages
and salaries for these employees will total an estimated $2.9 million based on the 2011 average annual wage
of $98,197 for utility industry workers in Michigan from the U.S. Bureau of Labor Statistics, Quarterly
Census of Employment and Wages. All 30 of these operating and support employees are expected to be
residents of the I-75 corridor region and will have associated wages of $2.9 million. Of these employees,
about 60 percent (18 operating and support workers) are expected to be residents of Genesee County based on
commuting data for the county from the U.S. Census Bureau, Local Employment Dynamics. Payroll for these
18 workers will total an estimated $1.8 million.
♦ Total benefit spending for the 30 operating and support employees will be about $1.6 million, based on
estimates provided by Consumers Energy indicating that the value of benefits comprises about 35 percent of
total compensation. Employee benefits include such items as paid leave and supplemental pay, health and
dental insurance, retirement programs, and various legally required benefits (Social Security, Medicare,
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 13
ON-GOING OPERATIONS BENEFITS
federal and state unemployment insurance, and workers compensation). Narrowing compensation to just the
value of employee benefits likely to be spent
Table 5: Largest Taxpayers in Genesee County, 2012
in Michigan and the I-75 corridor region, the
Ranked by taxable value of real and personal property
earnings impact of employee benefits in both
areas is an estimated $433,000.4 An estimated
Taxpayer Name
Value ($M)
Rank
$175,000 will benefit individuals residing in
Genesee County.
Consumers Energy
$217.0
1
Fiscal Benefits
♦ Total property tax revenue from the Thetford
General Motors
Genesee Valley Partners LP
Walmart
Meijer Inc/Good Will Co, Inc.
Edward Rose Assoc ETAL
Delphi Automotive Systems, LLC
Comcast Cablevision
Federal National Mortgage Assoc.
Android Industries, LLC
$110.5
$49.3
$43.3
$25.9
$25.4
$22.4
$21.7
$19.9
$19.3
facility will be an estimated $8 million
annually based on the most recent estimates
from Consumers Energy. While the exact
distribution of this revenue has yet to be
determined, it will benefit Genesee County
($1.5 million) and several local tax districts
Source: Genesee County Department of Equalization.
including the Thetford Township ($168,000),
the library district ($180,000), the local school
district ($3.2 million), and other special districts. As of 2012, Consumers Energy is the largest property tax
payer in Genesee County.
2
3
4
5
6
7
8
9
10
Table 6: Direct Economic and Fiscal Benefits of Typical Annual Operations of Thetford Generating Facility
Total Genesee County
Direct Economic Benefits
Operations Benefits
Operations and Maintenance (except Contract Services)
Contract Services
Payroll
Employee Benefits
Total Operations Benefits
Employees (FTE Operating and Support)
Direct Fiscal Benefits
Property Tax
Total Fiscal Benefits
Total Direct Economic and Fiscal Benefits
Bay City-Detroit
I-75 Corridor*
Michigan
$2,468,000
$5,500,000
$2,946,000
$1,586,000
$12,500,000
30
$520,000
$0
$1,785,000
$175,000
$2,480,000
18
$2,048,000
$1,100,000
$2,946,000
$433,000
$6,527,000
30
$2,468,000
$1,100,000
$2,946,000
$433,000
$6,947,000
30
$8,000,000
$8,000,000
$1,491,000
$1,491,000
-$0
$1,081,000
$1,081,000
$20,500,000
$3,971,000
$6,527,000
$8,028,000
*T he Bay City-Detroit I-75 Corridor region is defined as Bay, Saginaw, and Genesee Counties and the Detroit-Warren-Livonia Metropolitan Statistical Area.
4
Earnings impacts are based on the portion of total compensation (including wages, salaries, and benefits) that is likely to be
spent locally and includes wages and salaries, paid leave, and supplemental pay. Health insurance benefits are also included
for the state and I-75 corridor region. Earnings were estimated based on data from the U.S. Bureau of Labor Statistics,
National Compensation Survey.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 14
ON-GOING OPERATIONS BENEFITS
Direct, Indirect, and Induced Benefits
The annual operations of the Thetford facility will
have multiplicative impacts on the state, regional,
and county economies. Multiplicative impacts are
based on the value of output in the electric power
generation, transmission, and distribution industry.
This analysis assumes that the company’s total
value of output is equal to its total expenditures.
These benefits will occur annually assuming
similar business operations and tax structures.
Michigan
♦ Value of Output: Based on the industry
relationships revealed through the RIMS II
multipliers, $6.9 million in direct output at the
Thetford facility will support $4 million in
additional output in all industries throughout
the state. This includes the value of output
supported by the spending of the employees
(the induced benefit) and the local supplier
companies and their employees (the indirect
benefit). Therefore, the total direct and indirect
benefit of the typical annual operations of the
Thetford facility is $10.9 million in total state
output ($6.9 million direct output + $4 million
indirect and induced output), as shown in
Table 8.
Table 7: Typical Annual Property Tax Revenue
by District for the Thetford Generating Facility
District
State Education
Levy Revenue
6.000 $1,081,000
County
Genesee County
Paramedics
Parks
Senior Citizens
Health Services
Veterans
5.5072
0.4847
0.4847
0.7000
1.0000
0.1000
$993,000
$87,000
$87,000
$126,000
$180,000
$18,000
Local
Thetford Township
0.9340
$168,000
Other
Mott Community College
Genesee Intermediate School
Bishop International Airport Authority
Genesee District Library
Mass Transportation Authority
Mt. Morris Schools
Mt. Morris School Debt
2.8596 $516,000
3.5341 $638,000
0.4847
$87,000
0.9981 $180,000
0.8000 $144,000
18.0000 $3,244,000
2.5000 $451,000
Total
44.3871 $8,000,000
Note: Property tax revenue will be subject to changes in tax districts, mill
levies, property valuations, and state laws. The numbers reported are
not final.
♦ Employment: Consumers Energy will directly
employ about 30 operating and support workers for its operations at the Thetford facility. Based on the RIMS
II multipliers, the production of the $4 million in indirect and induced output in all industries throughout the
state will require about 73 employees. Therefore, the annual operations of the Thetford facility will support
employment of 103 workers (30 direct employees + 73 indirect employees), as shown in Table 8.
♦ Earnings: The employees at the Thetford facility will have associated earnings of $3.4 million directly
benefiting the Michigan economy. Based on the relationships revealed through the RIMS II multipliers, the
73 indirect employees that produce the $4 million in indirect and induced output have associated earnings of
about $2.6 million. As a result, the 103 direct and indirect employees have estimated earnings of $6 million
($3.4 million direct earnings + $2.6 million indirect earnings), as shown in Table 8. All earnings values are
included in the total value of output; earnings are not in addition to the value of output.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 15
ON-GOING OPERATIONS BENEFITS
Table 8: Total Economic Benefit of Typical Annual Operations of the
Thetford Generating Facility in Michigan
Direct Impact
Multiplier
Indirect &
Induced Impact
Total Impact
$6.9
$3.4
30
1.5719
1.7646
3.4187
$4.0
$2.6
73
$10.9
$6.0
103
Value of Output ($M)
Earnings ($M)
Employment
Calculation Note: Direct x Multiplier = Total Impact
Total Impact - Direct Impact = Indirect & Induced Impact
Bay City - Detroit I-75 Corridor Region
♦ Value of Output: Based on the industry relationships revealed through the RIMS II multipliers, $6.5 million
in direct output at the Thetford facility will support $3.7 million in additional output in all industries
throughout the I-75 corridor region. This includes the value of output supported by the spending of the
employees (the induced benefit) and the local supplier companies and their employees (the indirect benefit).
Therefore, the total direct and indirect benefit of the typical annual operations of the Thetford facility is $10.2
million in total regional output ($6.5 million direct output + $3.7 million indirect and induced output), as
shown in Table 9.
♦ Employment: Consumers Energy will directly employ 30 operating and support workers from the I-75
corridor region for its operations at the Thetford facility. Based on the RIMS II multipliers, the production of
the $3.7 million in indirect and induced output in all industries throughout the region will require about 73
employees. Therefore, the annual operations of the Thetford facility will support employment of 103 workers
(30 direct employees + 73 indirect employees), as shown in Table 9.
♦ Earnings: The employees residing in the I-75 corridor region will have associated earnings of $3.4 million
directly benefiting the regional economy. Based on the relationships revealed through the RIMS II
multipliers, the 73 indirect employees that produce the $3.7 million in indirect and induced output have
associated earnings of about $2.6 million. As a result, the 103 direct and indirect employees have estimated
earnings of $6 million ($3.4 million direct earnings + $2.6 million indirect earnings), as shown in Table 9.
Table 9: Total Economic Benefit of Typical Annual Operations of the
Thetford Generating Facility in the Bay City-Detroit I-75 Corridor Region
Direct Impact
Multiplier
Indirect &
Induced Impact
Total Impact
$6.5
$3.4
30
1.5719
1.7646
3.4187
$3.7
$2.6
73
$10.2
$6.0
103
Value of Output ($M)
Earnings ($M)
Employment
Calculation Note: Direct x Multiplier = Total Impact
Total Impact - Direct Impact = Indirect & Induced Impact
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 16
ON-GOING OPERATIONS BENEFITS
Genesee County
♦ Value of Output: Based on the industry relationships revealed through the RIMS II multipliers, $2.5 million
in direct output at the Thetford facility would support about $877,000 in additional output in all industries
throughout Genesee County. This includes the value of output supported by the spending of the employees
(the induced benefit) and the local supplier companies and their employees (the indirect benefit). Therefore,
the total direct and indirect benefit of the typical annual operations of the Thetford facility is $3.4 million in
total county output ($2.5 million direct output + $877,000 indirect and induced output), as shown in Table 10.
♦ Employment: Consumers Energy will directly employ about 18 operating and support workers from Genesee
County for its operations at the Thetford facility. Based on the RIMS II multipliers, the production of the
$877,000 in indirect and induced output in all industries throughout county will require about 28 employees.
Therefore, the annual operations of the Thetford facility will support employment of 46 workers (18 direct
employees + 28 indirect employees), as shown in Table 10.
♦ Earnings: The employees residing in Genesee County will have associated earnings of $2 million directly
benefiting the county economy. Based on the relationships revealed through the RIMS II multipliers, the 28
indirect employees that produce the $877,000 in indirect and induced output have associated earnings of
about $877,000. As a result, the 46 direct and indirect employees have estimated earnings of $2.9 million ($2
million direct earnings + $877,000 indirect earnings), as shown in Table 10.
Table 10: Total Economic Benefit of Typical Annual Operations of the
Thetford Generating Facility in Genesee County
Direct Impact
Multiplier
Indirect &
Induced Impact
$2.5
$2.0
18
1.3537
1.4475
2.5425
$0.9
$0.9
28
Value of Output ($M)
Earnings ($M)
Employment
Total Impact
$3.4
$2.9
46
Calculation Note: Direct x Multiplier = Total Impact
Total Impact - Direct Impact = Indirect & Induced Impact
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 17
SUMMARY
Construction Activity
♦ Michigan: The direct economic benefit during the three years of construction of the Thetford facility and
transitory construction worker spending in Michigan will be an estimated $140.7 million produced by 734
workers (in worker years) earning $77.7 million. This activity will support an additional $179.6 million in
output in all industries in Michigan. The production of the $179.6 million in additional output will require
about 1,963 indirect worker years. These workers will have associated earnings of $74.8 million. All earnings
values are included in the total value of output; earnings are not in addition to the value of output.
Combined, the construction of the Thetford facility will generate direct and indirect output in Michigan
over the three-year period valued at $320.3 million produced by 2,697 worker years (or an average of 900
workers per year) earning a total of $152.5 million.
In addition, the direct fiscal benefit in Michigan over the three-year period will be $10.2 million in sales
and use and lodging tax revenue from construction purchases and transitory worker spending.
Table 11: Total Economic Benefit of Construction of the
Thetford Generating Facility
Direct Impact
Indirect &
Induced Impact
Total Impact
Michigan
Value of Output ($M)
Earnings ($M)
Employment
$140.7
$77.7
734
$179.6
$74.8
1,963
$320.3
$152.5
2,697
Bay City - Detroit I-75 Corridor
Value of Output ($M)
Earnings ($M)
Employment
$109.9
$67.4
656
$128.7
$62.0
1,683
$238.6
$129.4
2,339
$5.5
$2.2
37
$3.1
$1.1
34
$8.6
$3.3
71
Genesee County
Value of Output ($M)
Earnings ($M)
Employment
Calculation Note: Direct x Multiplier = Total Impact
Total Impact - Direct Impact = Indirect & Induced Impact
♦ Bay City – Detroit I-75 Corridor Region: The direct economic benefit during the three years of construction
of the Thetford facility and transitory construction worker spending in the I-75 corridor region will be an
estimated $109.9 million produced by 656 workers (in worker years) earning $67.4 million. This activity will
support an additional $128.7 million in output in all industries throughout the I-75 corridor region. The
production of the $128.7 million in additional output will require about 1,683 indirect worker years. These
workers will have associated earnings of $62 million. All earnings values are included in the total value of
output; earnings are not in addition to the value of output.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 18
SUMMARY
Combined, the construction of the Thetford facility will generate direct and indirect output over the threeyear period in the I-75 corridor region valued at $238.6 million produced by 2,339 worker years (or an
average of 780 workers per year) earning a total of $129.4 million.
♦ Genesee County: The direct economic benefit during the three years of construction of the Thetford facility
and transitory construction worker spending in Genesee County will be an estimated $5.5 million produced by
37 workers (in worker years) earning $2.2 million. This activity will support an additional $3.1 million in
output in all industries throughout the county. The production of the $3.1 million in additional output will
require about 34 indirect worker years. These workers will have associated earnings of $1.1 million. All
earnings values are included in the total value of output; earnings are not in addition to the value of output.
Combined, the construction of the Thetford facility will generate direct and indirect output over the threeyear period in Genesee County valued at $8.6 million produced by 71 worker years (or an average of 24
workers per year) earning a total of $3.3 million.
On-Going Operations
♦ Michigan: The direct economic benefit of the typical annual operations of the Thetford facility in Michigan
will be an estimated $6.9 million produced by 30 operating and support workers earning $3.4 million. The
operating activity will support an additional $4 million of output in all industries in Michigan. The production
of the $4 million in additional output will require about 73 indirect workers. These workers will have
associated earnings of $2.6 million. All earnings values are included in the total value of output; earnings are
not in addition to the value of output.
Combined, the typical annual operations of the Thetford facility will generate direct and indirect output in
Michigan each year valued at $10.9 million produced by 103 workers earning a total of $6 million.
♦ Bay City – Detroit I-75 Corridor Region: The direct economic benefit of the typical annual operations of the
Thetford facility in the I-75 corridor region will be an estimated $6.5 million produced by 30 operating and
support workers earning $3.4 million. The operating activity will support an additional $3.7 million of output
in all industries in the region. The production of the $3.7 million in additional output will require about 73
indirect workers. These workers will have associated earnings of $2.6 million. All earnings values are
included in the total value of output. Earnings are not in addition to the value of output.
Combined, the typical annual operations of the Thetford facility will generate direct and indirect output in
the I-75 corridor region each year valued at $10.2 million produced by 103 workers earning a total of $6
million.
♦ Genesee County: The direct economic benefit of the typical annual operations of the Thetford facility in
Genesee County will be an estimated $2.5 million produced by 18 operating and support workers earning $2
million. The operating activity will support an additional $877,000 of output in all industries in the county.
The production of the $877,000 in additional output will require about 28 indirect workers. These workers
will have associated earnings of $877,000. All earnings values are included in the total value of output.
Earnings are not in addition to the value of output.
Combined, the typical annual operations of the Thetford facility will generate direct and indirect output in
Genesee County each year valued at $3.4 million produced by 46 workers earning a total of $2.9 million.
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 19
SUMMARY
Fiscal Benefit
♦ Total annual property tax revenue from the Thetford facility will be an estimated $8 million benefiting
Genesee County, the Thetford Township, libraries, parks, health services, local schools, and other special
districts.
Table 12: Total Economic Benefit of Typical Annual Operations of the
Thetford Generating Facility
Direct Impact
Multiplier
Indirect &
Induced Impact
Total Impact
Michigan
Value of Output ($M)
Earnings ($M)
Employment
$6.9
$3.4
30
1.5719
1.7646
3.4187
$4.0
$2.6
73
$10.9
$6.0
103
Bay City - Detroit I-75 Corridor
Value of Output ($M)
Earnings ($M)
Employment
$6.5
$3.4
30
1.5719
1.7646
3.4187
$3.7
$2.6
73
$10.2
$6.0
103
Genesee County
Value of Output ($M)
Earnings ($M)
Employment
$2.5
$2.0
18
1.3537
1.4475
2.5425
$0.9
$0.9
28
$3.4
$2.9
46
Calculation Note: Direct x Multiplier = Total Impact
Total Impact - Direct Impact = Indirect & Induced Impact
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 20
REFERENCES
Consumers Energy. www.consumersenergy.com
Genesee County Equalization Department. http://www.gc4me.com/departments/equalization/index.php
Google Maps. http://maps.google.com
Hoovers. Market Analysis Profile.
http://www.hoovers.com/
Michigan Department of Treasury. http://www.michigan.gov/treasury
RentLinx.com. Michigan State Housing Development Authority, Michigan Housing Locator.
http://michiganhousinglocator.rentlinx.com (Accessed January 2013).
Tripadvisor.com, Hotels/motels near Mount Morris, MI. http://www.tripadvisor.com/ (Accessed January 2013).
U.S. Department of Commerce, Bureau of the Census. Local Employment Dynamics, 2010.
http://lehd.did.census.gov/led/index.html
U.S. Department of Commerce, Bureau of Economic Analysis. Regional Input-Output Modeling System II
Multipliers, 2002 Annual Input-Output Table for the Nation and 2010 regional data.
U.S. Department of Energy, Energy Information Administration. “International Natural Gas Outlook 2011.”
September 2011. http://www.eia.gov/forecasts/ieo/nat_gas.cfm.
U.S. Department of Energy, Energy Information Administration. “Short-Term Energy Outlook – Natural Gas
Section.” February 2013. http://www.eia.gov/forecasts/steo/report/natgas.cfm.
U.S. Department of Labor, Bureau of Labor Statistics. National Compensation Survey, “Employer Costs for
Employee Compensation,” September 2012. http://www.bls.gov/ncs/
U.S. Department of Labor, Bureau of Labor Statistics. Quarterly Census of Employment and Wages, Annual
Average 2011. http://www.bls.gov/cew/
U.S. General Services Administration. FY 2013 Per Diem Rates for Michigan, October 2012 – September 2013.
http://www.gsa.gov/portal/category/100120
Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 21
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Consumers Energy
Economic & Fiscal Benefits of the Thetford CCNG Generating Facility
Page 22
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