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.
Lets grant the complaint by environmental groups that the companys claims are more than a little self-serving. AEP is a business and makes its decisions for business reasons, the editorial states. But the industry and its supporters are also right that we cant allow a federal agency like the EPA to just go about its business unchecked and unchallenged.
Kentucky customers have been told to expect a 19.2 percent boost in their bills by 2016, according to Louisvilles Wave 3 news.
The EPA is forcing utilities to do this, said Chip Keeling, a spokesman for Louisville Gas & Electric. We have to meet these regulations because the EPA is mandating it for us to do it. Theyre forcing us to do it.
Aside from increased electricity costs that will be passed onto consumers, AEP reports an expected net loss of 600 jobs as plants are shuttered, which will have an impact on related industries outside of the plants themselves.
The economic impact will extend far beyond direct employment at power plants as thousands of ancillary jobs are supported by every coal-fueled generating unit, an AEP spokesman told PennEnergy. Businesses that have benefited from reasonably priced coal-fueled power will face the impact of electricity price increases ranging from 10 percent to more than 35 percent just for compliance with these environmental rules at a time when they are still trying to recover from the economic downturn.
According to the Billings Gazette, AEPs plant closures will hurt industries in Wyoming and Montana because as AEP works to close plants in Ohio, West Virginia and Virginia, the company will also cut back on the 24 million tons of coal that it currently buys from the Powder River Basin.
The Charleston Gazette reports that AEP is not focused on maintaining the status quo, however. It simply wants more than the allotted 3 years to transform itself. A Bluefield Daily Telegraph editorial backs up AEP, saying the new EPA regulations are unrealistic, with the few years allowed for retrofitting meaning more plants will have to be shuttered than otherwise would face closures.
Although discounted by some, the potential impacts of the reliability of the transmission system, particularly in the Midwest, are significant, AEP said in a news release. The proposed timelines for compliance arent adequate for construction of significant retrofits or replacement generation, so many coal-fueled plans would be prematurely retired or idled in just a few years. AEPs compliance plan alone would abruptly cut generation capacity in the Midwest by more than 5,400 megawatts.
However, the Center for American Progress denounced AEPs plans to close plants, saying the company was threatening to shut down plants to stoke congressional and public opposition to EPAs efforts to reduce toxic air pollution.
AEP would prefer to shutter these plants because it claims that the cost of reducing the arsenic, lead, mercury, acid gases and other toxic pollutants is prohibitive, Daniel Weiss and Valeri Vasquez write. What AEP did not say is that the cost of cleanup is expensive because these units are very old and dirtier than newer plants — 50 years on average.
"The company's plan highlights a simple fact that AEP failed to mention: Closing plants is a business decision, plain and simple," Vickie Patton, general counsel for the Environmental Defense Fund, told The Hill. "EPA regulations do not require any power plants to shut down. Companies like AEP make the decision — either invest in common retrofits like scrubbers to clean up pollution, or close down old and poorly controlled plants and replace them with cleaner, more efficient generation."
A Ceres report issued in February also says the EPAs air quality rules will create — not destroy — jobs, estimating that they will add 1.5 million construction and professional jobs as new plants are built and old plants are retrofitted.
The American Legislative Exchange Council counters this, saying EPAs pending greenhouse gas regulations will reduce the Gross Domestic Product by $500 billion by 2030, eliminate 2.5 million jobs by 2030, reduce U.S. household income by $1,200 by 2030 and increase U.S. energy costs by 50 percent for gasoline and residential electricity prices, 75 percent for industrial electricity and residential natural gas prices and 600 percent for electric utility coal prices.
The EPAs move to regulate greenhouse gases has gained opposition from many, with at least 15 states — including Utah — seeking to stop it from issuing rules controlling greenhouse emissions until it re-opens hearings on its endangerment finding declaring the emissions dangerous to people, Reuters reports.