ARLINGTON, Va. — The U.S. Environmental Protection Agency has released a barrage of new regulations affecting the electric power supply in the United States. These regulations relate to the operations of power plants, particularly coal-fired power plants, by limiting air emissions, water use and ash disposal.
The various new standards which will take effect between now and 2020 include limits on cross-state transport of fine particulates, mandatory controls to reduce regional haze, regulations on emissions of mercury and chlorine, new standards for local air quality for sulfur dioxide and ozone and, most significantly, limits on emissions of carbon dioxide to address concerns about future global warming.
EPA’s proposed new limits on carbon dioxide emissions represent a radical departure from prior regulations. EPA has used a little-known section of the Clean Air Act, section 111(d), to regulate activities of every state in the country that affect electricity generation. These regulations will include the efficiency of operations of existing coal-fired power plants, how much states allow all of the power plants to operate, the mandated construction of new power plants generating power from wind and solar and the development of programs to reduce electricity use by homeowners and businesses across the country.
The scope of EPA’s regulation of electricity generation and use under this new rule is, simply put, breathtaking.
EPA has grossly under-estimated the costs of its new regulations by making unrealistic assumptions. My company, Energy Ventures Analysis, recently performed a study calculating the expected cost to the country of EPA’s new regulations, including the new regulation of carbon dioxide.
We found that the cost of energy (electricity and natural gas) will increase by $284 billion dollars annually from 2012 to 2020. This increase will show up in utility bills for homeowners and businesses across the country.
The average household will see an increase of $681 per year in its electric and gas utility bills by 2020.
And North Dakota would be especially hard hit by EPA’s restrictions on electric generation by coal-fired power plants.
North Dakota generates 78 percent of its electricity from coal-fired power plants, because of the abundance of low-cost lignite in the state. As a result of its significant usage of low-cost coal, North Dakota residential ratepayers had the second-lowest average electricity rates of any state in 2013.
That will soon change, as EVA projects that the average North Dakota homeowner will see a 33 percent increase in the cost of electricity between 2012 and 2020, in large part due to EPA’s new regulations.
Natural gas prices also will jump, because EPA’s rules force power companies to rely much more heavily on natural gas at the same time that natural gas prices will be under pressure from expanded use by industries.
North Dakota also will lose jobs, both directly at the lignite mines where 1,200 workers produce the lignite which supplies the local power plants, and indirectly at businesses that cannot afford the higher cost of energy.
Recent studies by the organizations that manage the nation’s electric power grids are warning that EPA’s new rules are threatening the reliability of electric power service. Power plants will be forced to close, and the new sources of power which EPA projects (wind and reduced demand) are not as reliable as the existing fleet, which has brought electricity to the countryside.
Ultimately, EPA’s rules promise to increase the cost of energy for everyone and jeopardize the reliability of service.
Schwartz is president of Energy Ventures Analysis, Inc.
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- On December 12, 2014