The Economic Impacts of the August 2003 Blackout
Prepared by the Electricity Consumers Resource Council (ELCON) - February 9, 2004
This paper summarizes recent efforts to quantify the total economic costs of the August 2003 Blackout.
These estimates are shown to be consistent with post-blackout surveys of affected manufacturers and
businesses. The paper concludes with examples of impacts to major industries and attempts to put a
face on the economic consequences of this unfortunate debacle.
The August 14, 2003 Blackout started shortly after 4 PM EDT and resulted in the
loss of 61,800 MW of electric load that served more than 50 million people. The
footprint of the blackout on both sides of the US-Canadian border includes large urban
centers that are heavily industrialized and important financial centers (e.g., New York
City and Toronto). Nearly half the Canadian economy is located in Ontario and was
affected by the blackout. Service in the affected states and provinces was gradually
restored with most areas fully restored within two days although parts of Ontario
experienced rolling blackouts for more than a week before full power was restored.1
Other major North American blackouts in 1965 and 1977, and the 2000-2001
California Electricity Crisis, produced a sizable library of studies and analyses of the
direct and indirect economic costs of power outages on regional economies. Based on
the much-studied 1977 New York City blackout, ICF Consulting estimated the total
economic cost of the August 2003 blackout to be between $7 and $10 billion.2 These
figures are based on estimates of direct costs per kWh of the power outage (e.g., losses
due to food spoilage, lost production and overtime wages) and indirect costs due to the
secondary effects of the direct costs.3 According to ICF, the estimates are corroborated
by more recent simulation studies of potential outages in California.
Anderson Economic Group (AEG) estimates the likely total cost to be between
$4.5 and $8.2 billion wit