Rep. Lamar Smith Presses EPA for Answers

In an August 13th letter to EPA Administrator Gina McCarthy, U.S. Rep. Lamar Smith (TX) expressed a number of concerns about the data and analysis used in constructing the agency’s landmark carbon dioxide mandate. Rep. Smith is Chairman of the House Committee on Space, Science, and Technology.


Rep. Smith expressed specific concerns that the modeling used to regulate greenhouse gases under Section 111d of the Clean Air Act was flawed and deficient. Such flaws, he argues, have become routine in the agency’s analysis for important rules.

“Flaws in recent EPA analysis amplify concerns about the real impacts of these regulations. Last week the Government Accountability Office released a report highlighting a pattern of shoddy EPA analysis. It was revealed that EPA relied on decades old data and ignored important factors,” Smith’s letter reads. “The independent watchdog warned that ‘EPA cannot ensure that its [analysis provides] the public with a clear understanding  of its decision making’.”

Read Rep. Smith’s August Letter

PACE and others have argued that significant questions remain unanswered about the potential costs of the new carbon dioxide mandate, as well as about the rule’s benefits. A study by NERA Economic Consulting released just this month summarizes that EPA’s rule comes with high costs and highly questionable results. Rep. Smith alleges, too, that EPA has not been forthright with consumers about the bargain proposed by the new rule.

“The effects of EPA’s policies will vary dramatically and hinge on a wide variety of issues including everything from existing power resources and access to low cost alternatives to infrastructure constraints and energy demands. Americans deserve the bottom line: what does it cost and what will we get for the money?”

Most recently, Rep. Smith submitted a follow-up letter to Administrator McCarthy after receiving a less than satisfactory response to his detailed concerns. The letter asks the agency chief to reveal to the American people about how the modeling was performed and what the consequences of the rule will be.

Read Rep. Smith’s Most Recent Letter

“With the close of the comment period rapidly approaching, the EPA must perform the requested analysis immediately,” he writes. “We cannot afford to ignore the inconvenient details when the truth hangs in the balance. I appreciate your respect for our shared obligation to the American people to be transparent and honest.”


Study Says EPA Carbon Rule Bad Bargain

A study released just days ago by NERA Economic Consulting confirms what many already believe about EPA’s proposed carbon dioxide rule – that the rule brings high costs without much benefit. The study, entitled Potential Energy Impacts of the EPA Proposed Clean Power Plan, was commissioned by the American Coalition for Clean Coal Electricity and others, including Consumer Energy Alliance, a PACE partner.

NERA Report

Read the Full Report Here

Among the conclusions of the report:

  • EPA’s proposal is the most expensive environmental regulation ever imposed on the electric power sector, costing at least $41 billion per year. NERA’s study finds that costs from the rule could be as high as $73 billion annually, compared to EPA’s internal estimate of just $8.8 billion per year.
  • EPA’s proposal is projected to cause double digit electricity rate increases in 43 states, with fourteen states facing price increases that could exceed 20%. The nationwide impact is expected to be between 12% to 17%.
  • At least 45,000 more megawatts of coal-fired electric generating capacity are projected to retire under EPA’s proposal. That’s greater than the entire electricity supply of New England.
  • Higher electricity prices will be especially harmful to low-income, fixed-income, and middle-income families. Real income for America’s 60 million low-income and middle-income families has declined by 22% in the past decade, while energy prices have increased 27%.
  • Despite its enormous cost, the EPA proposal will have no real effect on global climate change.
  • So far, legislatures, governors, and attorneys general representing 30 states have expressed opposition to EPA’s approach.

“PACE has argued, as others have, that EPA’s carbon dioxide mandate is the wrong approach to charting a course for American energy,” explains PACE Executive Director Lance Brown. “The rule is all pain and no gain, hurting America’s most vulnerable power customers while doing little to nothing to address climate concerns.”


States Look for Safety Valve

According to a new report from SNL, states continue to seek relief from the possibility that EPA’s new carbon dioxide rule could reduce the reliability of the power grid. Some stakeholders are advocating for a  “safety valve” that could protect customers in the case of another polar vortex weather event or other extreme conditions. Recently, officials from Michigan and Kentucky discussed the need for such a safety valve during a panel discussion on the impacts of the carbon dioxide regulation hosted by Resources for the Future.

“There’s a commonality emerging on common categories,” said John Lyons, Kentucky’s assistant secretary for climate policy. “We, too, are going to suggest some sort of safety valve, or safety net, should the landscape of energy production change drastically.”

According to SNL’s report, a number of states are now asking EPA to provide an escape hatch to the proposed rule if compliance with the rule is compromised due to unforeseen events. The new rule mandates ambitious carbon dioxide reduction targets by utilities, including a 19.2% reduction from 2012 levels and a 30% reduction from 2005 levels by the year 2030. State regulatory departments are asked to create a plan for how to meet those targets.

The demands of the new rule already have drawn the attention of grid managers. For example, Southwest Power Pool Inc. filed comments with the EPA last week that included demands for a “reliability safety valve.” Southwest expressed concerns that retirements of coal plant caused by EPA’s rule would jeopardize the availability of power for customers.

“We need a safety valve,” said G. Vinson Hellwig, chief of the Air Quality Division of the Michigan Department of Environmental Quality. “What if a pump goes out on a nuke? It’s out for a year. That’s a huge reduction [in megawatt-hours]. We don’t know how we’re going to meet that.”

Hellwig described a scenario in which a carbon-free nuclear power plant were to go offline, threatening the state’s carbon dioxide compliance. According to SNL, “both Hellwig and Lyons sounded nervous about exactly how their states could comply with the proposed targets,” with Hellwig pointing out that Michigan’s Upper Peninsula already faces significant reliability issues. Some of those issues could be mitigated by new investments in capacity, but those projects don’t develop quickly.

“As renewable energy develops, we have to develop, in some cases, new transmission lines,” Hellwig explained. “That takes time.”

The uncertainty surrounding how to meet EPA’s new rule while maintaining reliability for customers caused Lyons to wonder aloud whether some states will even submit a plan.

“I expect more than one or two states not to submit a plan,” Lyons said. “It might ultimately come down to that, much as I hate to say it. This is obviously the most environmentally and energy significant rule that [the] EPA has ever done, and I think there’s a lot riding on this for a lot of people. It is definitely the most politically charged regulation I’ve dealt with in 25 years. I think there’s a lot left to be seen.”