May 24, 2015

Federal Agency Says EPA Power Plant Rule Would Raise Energy Prices

Last Friday, the Energy Information Administration (EIA), an independent federal government agency, released as assessment of the U.S. Environmental Protection Agency’s (EPA) proposed regulation governing emissions from existing power plants. The EIA found the draft rule would increase energy prices by an average of 4.9 percent nationally (and by as much as 10 percent in some regions) over the next five years while only “modestly” reducing greenhouse gas emissions (GHGs). 

The EIA also predicted energy prices will continue to rise through 2030, estimated economic growth would be one-quarter of a point lower by 2040 and natural gas prices would also increase as a result of the rule. 

According to The Wall Street Journal, the rule would also result in a nine percent reduction in U.S. electricity system capacity. How that reduction will impact grid reliability is unclear based on this study. As U.S. News & World Report noted, the EIA did not examine how the rule would affect reliability. Other studies have argued the rule would harm reliability. E&E Daily explained why: “[T]he rule would shift generation away from baseload coal, nuclear and hydropower, which are located on-site, and toward natural gas, which requires real-time fuel delivery, and renewables, which are intermittent. … Those shifts are what critics have said might cause electric reliability concerns.” 

The Obama Administration also said last week that it plans to release the final draft of the existing power plant rule in August. Want to learn more about how this rule will impact the American metals industry? Read this column by Jim Waters from Kentucky’s Bluegrass Institute. Waters warns EPA regulations “threaten aluminum’s revival.”