Study Shows EPA Rules Will Cause Power Rate Hikes

A recent study by National Economic Research Associates (NERA) predicts what many, including PACE, have been saying for months: that new EPA rules will cause significant hikes in the price of electricity. The study, released in September 2011, finds that four major EPA rules will come with a total price tag of $127 billion through the year 2020.

The NERA study considers the cost of the EPA’s Cross-State Air Pollution Rule (CSAPR), Utility MACT, proposed coal ash regulations, and a new rule governing cooling water intake structures. The $21 billion annual price tag makes these rules the most expensive EPA has ever written for the electricity sector. The total cost includes an estimated $104 billion in capital costs to implement new environmental controls and replace lost capacity.

In addition to studying total costs from the rules, NERA also calculated retail electricity price increases in twenty-two regions of the country, finding that some regions could see price increases of as much as 16%.

The NERA study also found a pronounced impact of the EPA rules on the American economy, with the four rules costing an estimated 183,000 American jobs per year.

“While presidential candidates are engaging in rich debate about how to kick-start the American economy, it is becoming clear that one of the first steps must be to make sure EPA rules aren’t destroying jobs faster than U.S. businesses can create them,” said Lance Brown, PACE Executive Director. “We need national leaders to act quickly before energy consumers are saddled with double digit price increases on electricity.”