Free Markets, Free People


Why the EPA’s new regulation will increase electricity prices significantly

Because, as you know, the laws of supply and demand can’t be repealed, no matter how much some want that to be true.

Today, the EPA will act to make electricity more expensive.

How?

The Environmental Protection Agency will issue the first limits on greenhouse gas emissions from new power plants as early as Tuesday, according to several people briefed on the proposal. The move could end the construction of conventional coal-fired facilities in the United States.

The proposed rule — years in the making and approved by the White House after months of review — will require any new power plant to emit no more than 1,000 pounds of carbon dioxide per megawatt of electricity produced. The average U.S. natural gas plant, which emits 800 to 850 pounds of CO2 per megawatt, meets that standard; coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.

If you can’t get Congress to pass a “cap and tax” law, then simply go it alone and direct executive agencies to implement regulation which will cap CO2 by making it too expensive to operate if the plant produces CO2 above the arbitrary limit you set.

“After Congress refused to pass carbon caps, the administration insisted there were other ways to skin the cat, and this is another way — by setting a standard deliberately calculated to drive affordable coal out of the electricity market,” Popovich said.

And that’s precisely what Obama’s done here.

Result?

Well it gives lie to the “all-of-the-above energy plan” that Obama has been pushing in stump speeches around the country:

Industry officials and environmentalists said in interviews that the rule, which comes on the heels of tough new requirements that the Obama administration imposed on mercury emissions and cross-state pollution from utilities within the past year, dooms any proposal to build a coal-fired plant that does not have costly carbon controls.

“This standard effectively bans new coal plants,” said Joseph Stanko, who heads government relations at the law firm Hunton and Williams and represents several utility companies. “So I don’t see how that is an ‘all of the above’ energy policy.”

Nor do I.

And it will have a significant effect:

The proposal does not cover existing plants, although utility companies have announced that they plan to shut down more than 300 boilers, representing more than 42 gigawatts of electricity generation — nearly 13 percent of the nation’s coal-fired electricity — rather than upgrade them with pollution-control technology.

Michael Brune, executive director of the Sierra Club, said the new rule “captures the end of an era” during which coal provided most of the nation’s electricity. It currently generates about 40 percent of U.S. electricity.

So the war on coal continues apace despite claims of an inclusive energy policy.

This is a preview of a 2nd Obama term.  As mentioned yesterday, public opinion will be of no consequence in January 2013 if he’s re-elected.  Hence, there’ll be no need to concern himself with it again.  4 years of unilateral action by agencies such as the EPA can certainly be expected:

The EPA rule, called the New Source Performance Standard, will be subject to public comment for at least a month before being finalized, but its backers said they were confident that the White House will usher it into law before Obama’s term ends.

“The Obama administration is committed to moving forward with this,” said Nathan Willcox, federal global warming program director for the advocacy group Environment America. “They’re committed to doing it this, and we’re committed to helping them do it.”

Fair warning.

~McQ

Twitter: @McQandO

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21 Responses to Why the EPA’s new regulation will increase electricity prices significantly

  • Well, shoot…it’s an “all of the above” policy…except. Except really drilling on Federally controlled land. Except using the vast reserves of coal. Except using the safe technology of fracking. Except building nuclear plants. Except taking our oil from safe, friendly (nice) Canada. Except letting the market decide where to put money for energy sources….

  • Hey, I see the ‘recovery’ all around me – gas has gone up 40 cents in the last 2 weeks. Now if we can just get it so our summer electric bills here in Texas can top out over, say, $800/month to keep a 2100 sq foot home at @75 degrees in July, we’ll be golden won’t we! We’ll be ‘recovering’ all over the place with $4.00 gallon milk, $10.00 a lb ground chuck hamburger and ears of corn at a $1.75 each. It’ll be AWESOME. And then we can look forward to the next executive orders from our truly imperial presidency come November 5th.

    • @looker I’m MORE worried about getting power AT ALL. We’ve been told to expect rolling black-outs. That’ll do wonders for job formation. Almost like it was a plan…

      • @Ragspierre Heh, yeah, that’ll go well for places with freezer units, won’t it, those rolling black-outs? Guess we’ll get to see how many old people the DEMOCRATS can kill this summer from heat stroke in the south (thought I might play the granny in the wheel chair over the cliff game they like playing)

        • @looker Two words….Generater set. Don’t buy Kohler, since they are honoring the Limbaugh boycott. Of course, a generator set is a fraction as effecient as a power plant. So, science and engineering be further DAMNED.

        • @Ragspierre I don’t suppose two dogs on a treadmill will be a substitute.

  • Not to forget, when the cost of powering goes up, the cost of everything powered goes up. They’re going to have to pay fines to the EPA to keep the grid alive, and they’re going to turn around and charge us for that. at least until someone who thinks magic occurs, like…you know who….and that companies can’t and don’t pass that along to us, tries to take them to court with the various state PUC’s.
    ========================================================
    In the meantime, send the President a letter to tell him how much you appreciate having to pay more for power in the midst of a downturn, because if he CAN’T control the global price of oil(I admit, he cannot, as magical as he thinks he may be), he for freakin sure can control an ‘executive’ agency like the EPA and tell them to back the hell off.

  • I agree that the EPA is overreaching, however, this does not necessarily drive up cost as badly as it sounds. It only affects new plants. Newer coal plants like the Japanese Isogo 2 (http://www.masterresource.org/2010/11/clean-coal-plant-today/) burn coal but with natural gas like pollution levels. Since these plants do so by being more efficient, they put out more power for less coal and tend to also product electricity for lower $$/kWh.

    • @hakandyami Increased operating costs, as they always are, get passed along to consumers. That will indeed make electricity prices rise. Couple that with a drop in supply (42 GW) and the same or increased demand, and again, prices rise.

      • @McQandO — So there are two different problems here being blended.

        A — The statement that coal plants cannot meet the new requirements are incorrect. For a *new* plant, the most efficient way to build it (ie, the way a company is inclined to build it anyhow) will meet the requirement. So this rule will not necessarily “kill coal”. Yes the rule is wrong, but it is incorrect to say that *new* coal plants can’t meet this requirement without “costly carbon controls”.

        B — Other rules which apply to older plants are causing utilities to shut them down rather than upgrade them. Yes, this is a horrid. However it is a separate rule and it is this rule that will reduce existing supply. I agree that this rule will drive up supply, but it does not have any effect on the operating costs of *new* plants.

        • Please forgive the typos, no way to edit comments. The last part should read “I agree that this rule will drive up cost based on shortened supply, but it does not have any effect on the operating costs of *new* plants.”

        • @hakandyami A – at additional cost than a conventional coal fired plant. Who will pay for that additional cost?

          B-Didn’t say it did. I just pointed out that A and B will increase cost and thus the price of electricity. And you’ve said nothing to change my mind on that.

        • @hakandyami But if you read the article, many utilities aren’t willing to make that investment in *new* plants because they’re not at all convinced that the game won’t change again after they make that huge initial investment.

    • @hakandyami That does not factor into the equation either the cost or environmental losses from wasting perfectly serviceable existing power plants, neither of which is inconsiderable. Again, replacing those plants would be a natural progression in the market, without any stupid waste imposed by the “smart people at EPA”.

      • @Ragspierre — This point doesn’t take affect because the rule applies to new plants. The rule, again, applies to new construction. They are not (based on what McQ is writing) with this rule, requiring that old plants be torn down.

        I actually agree that the EPA shouldn’t do this, but the point is flawed.

  • As has been queried, and more often in the last year or so…..IF he were trying to destroy the economy what WOULD he do differently?

    • @looker And…while I know this is NOT something anybody wants to look at over breakfast…Cloward-Piven was real. This looks to me like the perfection of Cloward-Piven, which only considered DEMAND. Our current mess seems to have addressed SUPPLY, as well.

  • “Carbon pollution” – oh, carbon dioxide? Because of global warming? The evil consensus gas that launched a thousand lazy scientists and bureaucrats and burned the topless towers of Illium? THAT pollution? The one that I’m exhaling, right….now? We should shut plants down and drive the cost of electricity and new plants up because of THAT ‘carbon pollution’? We should pay more for our consensus science conclusions?

    • @looker Yep. THAT carbon pollution. Otherwise known as “the breath of life” to your Ficus. Well…and algea…

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