In my six years of service on the Missouri Public Service Commission, I fought hard to keep electricity rates affordable and stable for the people of Missouri. But the Environmental Protection Agency’s new Clean Power Plan threatens to unravel years of hard work by myself and other state commissioners and saddle electricity consumers with unreasonable costs — not just in Missouri, but across the country.
Fortunately, more and more people are recognizing the danger. Senate Majority Leader Mitch McConnell, R-Ky., is calling on state legislatures to reject the EPA’s costly and legally dubious plan. His call has been taken up by other state utility regulators as well.
I support it, too, and I urge Missouri’s current commissioners to do the same. Our primary duty is to ensure that utilities’ investments are “prudent,” which they certainly would not be under the EPA’s plan.
They must take a stand now, while there’s still time to act. As soon as the final Clean Power Plan is unveiled this summer, many utilities will start implementing it immediately despite a bevy of outstanding legal challenges to the regulation. If they are allowed to proceed, it will be impossible to put the genie back in the bottle if the courts strike some or all of the regulation down.
First, does the rule make economic sense? State commissioners are responsible for ensuring that electricity rates are just and reasonable, meaning investments by utilities must provide positive economic value relative to the higher electricity rates it will require.
This is far from certain. Economywide, the cost of the Clean Power Plan could reach as high as $479 billion over 15 years. In Missouri, our electricity costs are estimated to increase by between 12 percent and 22 percent. Ameren, a utility company operating in our state, alone estimates an increase of $4 billion in rate hikes for its Missouri customers if the EPA’s proposed plan takes effect.
While this will cripple many working families, it is actually good news for utility companies. For them, higher costs mean higher rates and bigger profits. Given these backward incentives, it is the role of state utility commissioners to protect consumer interests.
The second question is: Do the legal challenges to the Clean Power Plan have any merit? Short answer: yes.
More than a dozen states are suing the administration over the regulation. Eminent legal scholar Laurence Tribe of Harvard Law School, who taught constitutional law to President Barack Obama, has gone to great lengths to highlight the unconstitutionality of the rule. If Tribe is right, any efforts by utilities to comply with the rule would ultimately be for naught. How could the high costs associated with a pointless effort be prudent?
This isn’t mere speculation — other legally questionable EPA rules show the danger of implementation before the courts have had their say.
The U.S. Supreme Court decision last month in Michigan v. EPA is a perfect example. Twenty-three states sued the EPA to stop its Mercury and Air Toxics Standards, a 2012 regulation that imposed unnecessarily strict limits on permissible mercury and other emissions from power plants. The court agreed the EPA failed to properly consider the regulation’s costs — which at $9.6 billion was then the most expensive regulation in history — and sent the EPA back to the drawing board.
Yet while this lawsuit was winding its way through federal court, power plants went ahead with implementation. As of January this year, it had already been credited with shutting down 61,000 megawatts of electricity — more than enough to power every home in Missouri — and raised electricity rates across the country. Thus despite the Supreme Court ruling this regulation is invalid, it is too little too late for the millions of Missourians who are already burdened with higher electricity costs.
Missouri’s public service commissioners cannot allow the Clean Power Plan to follow this pattern. They should act quickly to bar utilities from saddling their customers with higher electricity rates, at least until the various legal challenges are resolved. As a former commissioner myself, I can safely say there is no more prudent path.
Terry M. Jarrett is an attorney with Healy Law Offices LLC. He previously served as a Missouri Public Service commissioner and as chairman of the National Association of Regulatory Utility Commissioners’ Committee on Critical Infrastructure.
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- On July 8, 2015