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Proposed EPA pollutant rule could raise electricity rates by up to 60 percent

Published: Monday, June 13 2011 5:27 p.m. MDT

Customers nationwide are likely to see electricity prices rise anywhere from 1.8 percent to 60 percent in the coming years due in part to new EPA regulations that may soon be put into effect.

In what a Wall Street Journal opinion piece calls the most expensive rule in the agencys history, the Environmental Protection Agency moved against coal-fired power via a rule released in March targeting emissions of mercury, lead and other air pollutants from coal-fired power plants.

Bloomberg Businessweek quotes the EPA as saying the move is necessary because it will bring $140 billion in health benefits by 2016 and will save 17,000 lives a year.

But most of those alleged benefits are indirect — i.e., not from the mercury reductions that the rule is supposed to be for," The Wall Street Journal argues. "Rather, they come from pollutants ('airborne particles') that the EPA already regulates under other parts of the Clean Air Act. ... The real goal of the EPAs rule is to shut down fossil fuel electric power in the name of climate change.

After Congress failed to pass greenhouse gas legislation when Democrats controlled the House, Senate and White House, President Barack Obama turned to the EPA to regulate emissions using the Clean Air Act. The clean-air rule focused on mercury is being imposed by court order on a fixed four-year schedule due to start in November, according to the Financial Times. Investors Business Daily reports the agency has another 30 major regulations and more than 170 major policy rules in the pipeline.

The EPAs rule would require coal power plants to meet certain emission requirements that would make the plants more expensive to operate, raising prices. The cost of retrofitting will also lead some plants to be shuttered.

In a National Economic Research Associates study prepared for the American Coalition for Clean Coal Electricity, electricity sector costs are estimated to see an increase of $184 billion, or $17.8 billion per year. Average U.S retail electricity prices in 2016 are expected to increase by about 12 percent, with regional increases as much as 24 percent.

The effect of the rule is already being felt by states and companies, raising concerns about the economy and fears of higher energy prices nationwide.

In January, Rocky Mountain Power asked the Utah Public Service Commission for a 13.7 percent general rate increase. Spokesman David Eskelsen told the Deseret News the increase would mainly pay for the cost to produce electricity and for investments in equipment. On June 9 Kimball Rasmussen, CEO and President of Deseret Power, told Moon Lake Electric, a rural electric cooperative based in Roosevelt, Utah, that they expect to see a 6 percent to 8 percent increase in the price consumers pay for energy due to the EPAs required retrofits of coal plants.

Just a 6 percent rate increase for some Utahns could make them the object of envy for consumers in Illinois, who reportedly face a 40 percent to 60 percent increase in rates, according to the Chicago Tribune. The paper states the Illinois rate increase translates into an added $107 to $178 per year.

American Electric Power, which provides power to more than 5 million customers in 11 states, plans to retire nearly a quarter of its coal-fueled generating capacity in response to the rule. The company will also spend $8 billion to retrofit its remaining units. The impact of AEPs closures will be felt in Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia.

Indiana customers can expect to see an increase of 25 percent to 30 percent after AEP shutters three plants in Indiana, an editorial in the Fort Wayne News-Sentinel reports.

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