Abby L. Harvey
GHG Monitor
11/13/2015
National Economic Research Associates (NERA) said in a report this week that the Environmental Protection Agency’s carbon emissions standards for existing coal-fired power plants, the Clean Power Plan, will result in an 11-14 percent per year increase in electricity rates. “This analysis makes it abundantly clear the president’s power plan will result in higher electricity prices and delivers a sharp wake-up call to states and consumers,” Mike Duncan, president and CEO of the American Coalition for Clean Coal Electricity, the organization that requested the report, said in a release. “Common sense tells us that with 27 states seeking judicial action to stop this plan from being implemented there is reason enough for EPA to take this rule off the table. Sadly, however, common sense isn’t prevailing and as [a] result Americans’ economic well-being and livelihoods are at risk.”
The Clean Power Plan sets state-specific carbon emissions reduction targets and requires states to develop action plans to meet those goals. The rule applies to 47 states, with Alaska and Hawaii exempt due to their unique electric grids and Vermont exempt because the state does not have any coal-fired power plants.
According to the report, electricity rates would spike by 10 percent or more in 40 of the 47 states impacted by the regulations, and all 47 states would experience an increase of some sort. The group arrived at these figures using what they describe as a “state-of-the-art energy/economy model,” which combines a bottom-up electricity sector model with a top-down model of the full U.S. economy too offer “a comprehensive understanding of not just electricity sector compliance but also overall impacts on consumer spending power.”
“Energy policy needs to ensure all Americans have affordable and reliable electricity to meet everyday challenges and to help build a strong foundation of economic success. Regardless of where you stand politically, this plan fails to meet that threshold,” Duncan said.
The report does concede that “all compliance scenarios lead to large reductions in average CO2 emissions. Reductions range from 19 [percent] to 21 [percent] (relative to baseline emissions). By 2031, annual emissions are 36 [percent] to 37 [percent] lower than they were in 2005.”
The EPA said this week that its numbers do not agree with the NERA analysis. “EPA’s extensive analysis … shows that the CPP is effective, achievable and affordable. The Clean Power Plan provides ample time and flexibility to states and utilities and builds on trends toward cleaner electricity generation that are already well underway. As a result, the CPP will deliver climate and health benefits worth an estimated $34 to $54 billion per year in 2030, far outweighing the costs of $8.4 billion,” according to the agency statement.
EPA has also pointed to a NERA analysis of the draft version of the Clean Power Plan that was widely criticized by environmentalists and climate scientists. The report was said to inflate the costs of the proposed rule while ignoring the benefits of demand-side energy efficiency in reducing electricity bills. In the new study, however, NERA states that it has “identif[ed] least cost compliance from all available options within the assumed trading regions, including end-use energy efficiency.”
Senator Takes Note of Report
Senate Environment and Public Works Committee Chairman Jim Inhofe (R-Okla.) said in a statement that the NERA report further supports arguments he has made against the regulation since its inception. “Americans do not deserve to foot the bill of this costly and burdensome mandate meant to solidify the president’s legacy on climate change. Congress and the American people have consistently rejected efforts to federally mandate carbon controls, and I fully expect this attempt at backdoor cap-and-trade by the Obama administration to see the same fate,” Inhofe wrote.
