Last month, the U.S. Environmental Protection Agency published its final “Clean Power Plan” regulating carbon dioxide emissions. Now 26 states, including Louisiana and its Department of Environmental Quality, have filed suit against EPA, contending that the federal government is infringing on the states’ right to control our own energy choices.
Louisiana’s autonomy in regulating retail electricity markets has helped the state achieve the fifth-most affordable electricity prices in the country, yet EPA’s new carbon scheme threatens to raise energy prices in our state. In order to preserve the well-being of Louisiana families, our state leaders, including gubernatorial candidates John Bel Edwards and David Vitter, should pledge to use all tools at their disposal to fight implementation of President Barack Obama’s costly carbon regulations.
Earlier this year, the Pelican Institute released a report by economists at the Beacon Hill Institute assessing the impact of the proposed rule on Louisiana. Our study estimated that the cost of the regulation would be $258 million in 2030. Furthermore, the combined effects of this rule and two other regulations on power plants would increase electricity prices by 22 percent.
Unfortunately, the final version of the rule is still bad for Louisiana households. The state is expected to reduce its emissions by about 29 percent below 2012 levels by 2030. Since our state generates about one-fifth of its electricity from coal, the actions needed to meet the regulation will be substantial and, most likely, detrimental.
Conversely, Louisiana produces very little power from renewables. After conducting a three year Renewable Energy Pilot Program, the Louisiana Public Service Commission decided that a renewable energy mandate was unnecessary. However, since EPA’s rule heavily emphasizes replacing existing coal generation with new renewable sources, an implementation plan could impose a de facto statewide energy mandate.
Implementing the final rule could drastically change the make up of the electric power sector in the state, with severe ramifications for Louisianans. As affordable coal plants are prematurely retired in favor of new renewable energy resources, utilities will pass on costs to consumers and raise the price of energy for households. A recent Institute for Energy Research study compared the cost of new and existing electricity generation sources and found that existing coal plants produce electricity at about one-third of the cost of new wind facilities.
Affordable power is essential for all Louisianans, but especially low-income families. According to an analysis by energy economist Eugene Trisko, Louisiana households earning less than $10,000 spent 70 percent of their after-tax income on energy, creating serious tradeoffs among other essentials like food and healthcare. Due to the well-established connection between wealth and health, any regulation that increases the energy burden for poorer families will also harm public health.
The good news is that opposition against EPA’s rule is strong within Louisiana. Recognizing that the regulation undermines state authority and will increase energy costs, Gov. Bobby Jindal has indicated that Louisiana will not submit an implementation plan to EPA. Gubernatorial candidates Edwards and Vitter, facing a Nov. 21 runoff, should promise to support Gov.’s Jindal’s approach.
It is prudent for Louisiana’s leaders to “do no harm” and oppose EPA’s rule. Refraining from submitting a state plan in September 2016 is crucial to protecting citizens. Since states do not have to submit a final plan or make binding commitments in 2016, there is no downside to this approach. Furthermore, it allows more time for legal challenges to be heard by the courts.
Waiting for the courts to decide the issue before taking irrevocable compliance steps is the most effective way to protect Louisiana families and oppose the federal government’s intrusion into state affairs.
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- On November 11, 2015