EPA is in Denial About its Costly Carbon-Reduction Plan: Hal Quinn

While President Barack Obama was doubling down on his climate change regulationsfrom Beijing, his administration was ignoring a powerful backlash against them here at home.

A growing number of experts, including overseers of the nation’s electricity grid, regional power transmission authorities, power plant operators and energy economists, are all warning that the U.S. Environmental Protection Agency’s Clean Power Plan will lead to a less diverse supply of electricity, weaker grid reliability and higher energy bills for all Americans.

These warnings are disturbing enough, but even more so may be the administration’s determination to ignore them. Despite fears of a rutted road ahead, the EPA is blithely steering the nation’s electricity supply into the dark at high speed.

You don’t have to be an energy expert to fault EPA’s carbon-reduction plan for power plants.

Start with its series of complex assumptions about future energy demand, shifts in sources of electricity generation, estimates of more variable power sources and reduced energy use.

Examining these, the North American Electric Reliability Corporation — an international regulatory body charged with assessing the adequacy of our electric power system — concluded implementation will be difficult, if not impossible, without compromising the reliability of the nation’s electricity supply.

That’s because underlying this plan are four assumptions — what EPA ironically calls ‘building blocks’ — that actually cause the plan to crumble.

NERC found that EPA underestimated the number of power plants that will be closed and overestimated the amount of new power sources and increased energy efficiency expected to offset the power generation lost. EPA may be content to just guess whether the lights will stay on or go out but the rest of us should demand certainty.

Meanwhile, across the country, regional power authorities are also sounding alarms.

The Southwest Power Pool warns that EPA’s plan will result in cascading outages and voltage collapse in six of the eight states where it operates the electric grid. The Midcontinent Independent System Operator forecasts that the power reserves needed for 15 Midwestern states will fall below safe margins by 2016, and fall further after that.

The Electric Power Research Institute says EPA uses an overly simplistic analysis of what is actually possible in the real electric power world. The result will be a less diverse and increasingly degraded grid that American households and industries rely on for essential electric power.

American Electric Power of Ohio, one of the nation’s largest electric utilities, conducted performance studies that predicted widespread voltage degradation, collapse andcascading outages of the electric grid.

Finally, energy economists are also rounding on EPA’s plan. Recent studies show that, by purposefully replacing lower-cost sources of electricity with costlier and less reliable ones, EPA would more than erase the current $93 billion a year cost advantage that IHS Energy says we now derive from our diverse energy grid. Fuel diversity also cuts the variability of monthly utility bills in half; we would lose that, too.

This accounts for why EPA’s plan is so pricey.  Recent studies by independent economic consultants looked at the two options EPA offers the states for reducing emission rates and found the first would cost consumers at least $407 billion in higher electricity and natural gas prices. A second approach, one EPA prefers, could cost as much as $479 billion.

In short, states can choose between dumb and dumber. There are no low-cost options in the EPA plan.

While EPA remains in denial about the plan’s real costs, the nation’s governors do not have that luxury. Unless they persuade the administration to withdraw it, they’ll be left foisting on their citizens a very risky and costly power plan.

Hal Quinn is the president and CEO of the National Mining Association.

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