EPA 111(d)

Did You Know: How 111(d) Could Impact U.S.

A new analysis of the EPA’s Clean Power Plan conducted by NERA Economic Consulting details potential energy and consumer impacts of the CPP nationwide and in each state. The study and supporting materials are available here. Below are some highlights:

Ø Double-digit (10% or greater) average electricity price increases are projected in 40 states under at least one of the scenarios.
Ø Twenty-eight (28) states could see peak-year electricity price increases of at least 20%.
Ø Compliance costs total $220 billion to $292 billion over the 12- year period NERA modeled.
Ø Annual compliance costs average $29 billion to $39 billion.
Ø Consumers spend nearly $300 billion to cut electricity use.
Ø As many as 47,000 additional MW of coal capacity will retire.
Ø Households will have $64 billion to $79 billion less to spend.

EPA Supreme Court Case Decision Will Hopefully Set a Precedent

“By EPA’s logic, someone could decide whether it is “appropriate” to buy a Ferrari without thinking about cost, because he plans to think about cost later when deciding whether to upgrade the sound system.”
– Supreme Court Justice Antonin Scalia 

 

The Supreme Court’s decision to halt the EPA’s Mercury and Air Toxics Standards Rule in the Michigan v. U.S. Environmental Protection Agency case is a sign of rational thinking when it comes to the overreach of the EPA.
The Court shared in their opinion that the implementation of such a rule is not appropriate as it would impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits. With this decision, the Court has made it clear that the EPA must consider cost when it comes to rule-making.
Steve Wilson writes on how the Court’s decision could help Mississippi in the long term. Read his piece here.

The Economic Impact of the Clean Power Plan  

Kevin D. Dayaratna, Senior Statistician and Research Programmer with the Heritage Foundation, testified before the Committee on Science, Space and Technology on the costly economic impact of 111(d). Dayaratna provides in-depth information charting out the national employment and GDP ramifications if the EPA has its way. See that information here. 

The National Black Chamber of Commerce Says 111(D) Rule Will Hurt Minorities

National Black Chamber of Commerce President & CEO and former MEI Governor’s Energy Summit speaker, Harry Alford, shared his thoughts on how the Clean Power Plan will hurt America’s minority families and businesses. Read his thoughts here.

Regulatory Onslaught Update

Section 111(d) (i.e. The Electricity Cost Increase Plan)

Mississippi’s U.S. Senators Thad Cochran and Roger Wicker announced their plans to co-sponsor legislation designed to put a stop to the proposed Environmental Protection Agency regulation on carbon dioxide emissions, otherwise known as the Clean Power Plan. Read the full press release here.

Also related, a U.S. Court shot down a legal challenge from states asking the Court to stop the proposed rule. The Court told the rule’s opponents a challenge was premature until a final rule is in place. What this means is states and agencies, like MDEQ, will necessarily allocate time and money to prepare implementation of an economically devastating program. Read at more USA Today here.

U.S. Black Chamber of Commerce Says 111(d) Rule Will Hurt Minorities U.S. Black Chamber of Commerce President & CEO and former MEI Governor’s Energy Summit speaker, Harry Alford, shared his thoughts on how the Clean Power Plan will hurt America’s minority families and businesses. Read his thoughts here.

MEI’s 111(d) Cost Impact Analysis

Ozone (i.e. Economic Sanctions for Counties Rule)

In addition to EPA’s 111(d) scheme, the agency is also on a path to unnecessarily lower ozone standards. The result will likely be economic sanctions on multiple counties in Mississippi. Local officials and economic development professionals should pay equal, careful attention to both. While 111(d) will dramatically drive up electricity rates, the areas not meeting ozone standards will be shackled with a range of economic sanctions.

MEI Comments on Ozone

Waters of the U.S. Rule

The EPA’s proposed waters of the U.S. rule, which would clarify the reach of the Clean Water Act (79 Fed. Reg. 22,188), infringes on the states’ authority to manage their own natural resources and will result in expensive, new regulatory requirements in energy, farming, residential development and other sectors. The American Farm Bureau Federation recently released a detailed analysis of the rule and how much of an overreach this is by the agency.

An Update on Section 111(d)

Mississippi’s U.S. Senators Thad Cochran and Roger Wicker announced their plans to co-sponsor legislation designed to put a stop to the proposed Environmental Protection Agency regulation on carbon dioxide emissions, otherwise known as the Clean Power Plan. Read the full press release here.

Also related, a U.S. Court shot down a legal challenge from states asking the Court to stop the proposed rule. The Court told the rule’s opponents a challenge was premature until a final rule is in place. What this means is states and agencies, like MDEQ, will necessarily allocate time and money to prepare implementation of an economically devastating program. Read at more USA Today here.

Related: National Black Chamber of Commerce President & CEO and former MEI Governor’s Energy Summit speaker, Harry Alford, shared his thoughts on how the Clean Power Plan will hurt America’s minority families and businesses. Read his thoughts here.

MEI broke down the cost impact analysis of 111(d) in Mississippi if implemented.

MEI Comments on EPA’s Proposal to Lower the NAAQS Ozone Standard

The Mississippi Energy Institute urges EPA to maintain the current NAAQS Ozone Standard. Lowering the standard would unnecessarily impose economic sanctions on Mississippi while air models are known to be showing continued, steady improvement in ozone levels. Further, while major progress in ozone reductions has already been made over the past several decades due to technology and efficiency, EPA’s proposal will result in significant regulatory costs in addition to the economic sanctions and noticeably damage local economies. To be sure, job opportunities will decrease and costs to businesses and households will increase in these areas, all at a time when air quality is already improving under the current standard.

With at least 1/3 of the U.S. population already living in ozone non-attainment areas, a true, health-focused policy should first address those 100 million or more individuals who are, according to EPA, at the highest risk of negative health impacts.

Naturally occurring ozone levels are known to exist at different levels depending on location, climate and landscape. Mississippi, a rural state with a relatively low population, has monitors in places with little industrial activity nearby. Under the new standard, readings on these monitors could result in a non-attainment designation, virtually prohibiting industrial development in these areas. Energy and manufacturing are among the highest paying sectors in Mississippi, and community leaders in these areas are desperately eager to recruit new industrial projects to provide jobs to the citizens. Recruitment prospects diminish or even go away with non-attainment designations, leaving these small communities with no major options for economic growth.

Just a few years ago, EPA and a group of scientists set, what is to be assumed, a standard based on the Clean Air Act guidance, at that time lowering a standard that was set just several years before the 2008 standard. Now, with a proposed standard even lower, the standard seems to be ever-lowering each time the ordered review period comes up, suggesting a great deal of subjectivity in the process.

Given the regional variances in natural levels, I urge EPA to conclude the current standard is adequate and working in Mississippi, with no areas currently in non-attainment. For human health sake, I hope EPA can address the high ozone levels in current non-attainment areas, where much of the U.S. population resides. Mississippi’s environment does not need a lower standard, and Mississippi’s economy cannot afford one.

Senator Wicker Lambastes Proposed EPA Regs in Senate Hearing

The Mississippi Energy Institute analyzed the EPA’s proposed 111(d) rule and commented on the ramifications of the rule in December (Read here). In a recent senate hearing, Senator Roger Wicker presented an impressive rebuttal to the proposal while referencing the Institute’s analysis saying rule implementation could cost the state an estimated $14.2 billion. See Senator Wicker’s response in the video below.

Cost Impact Analysis of EPA’s 111(d)

MS Energy Institute Cost Impact Analysis of EPA 111(d) Proposal

  • EPA recently proposed to require that states enact programs to reduce carbon dioxide emissions from existing power plants.
  • Mississippi Energy Institute (MEI) estimates minimum incremental capital costs associated with the proposal at $14.2 billion for Mississippi.  In other words, Mississippi electric ratepayers would spend an extra $14 billion to construct facilities not likely to be built unless compelled by federal mandate.
  • With the regulated period running 2020-2030, plans would necessarily be completed within 3 years, and associated construction would start by 2017 or 2018 in order to begin compliance by 2020.
  • Of the $14.2 billion, over 98% of the costs will go to build electric power generating facilities to meet new generation mix “goals”, and since natural gas generation is high in each case, virtually all of the added costs are due to meeting aggressive renewable energy production targets as existing coal plants are prematurely retired.
  • In this analysis, MEI did not include normal generation or infrastructure costs likely to be incurred with or without the EPA rule.  Within the regulatory period, a certain amount of capital will be required to maintain, update, and expand Mississippi’s electric power infrastructure.  These costs to ratepayers are unknown but expected.  Examples include the Kemper County generation facility, transmission/distribution maintenance and expansion, the installation of pollution control equipment required by other EPA rules, MPSC energy efficiency program costs, the closure of old and inefficient power plants, and the addition of new power plants to meet new power demands with a growing population and economy.
  • EPA proposes Mississippi reach the “goals” in a combination of ways, including; electric power use reductions through energy efficiency programs, the closure of all existing coal power plants, and the addition of renewable generation sources.
  • To comply with the EPA proposal, total capacity in Mississippi will be about 2000 MW higher than the base case due to the requirement of installing large amounts of intermittent generation sources, like wind and solar (3000 MW solar and 800 MW wind to meet renewable target set by EPA).
  • Land requirements for 3000MW of solar capacity = 21,000 acres; 800MW of wind capacity = 48,000 acres.

 

Summary of Analysis

2012 2030 Base Case (Without Rule) 2030 with EPA Proposal
Generation Mix (Output) 71% Natural Gas,13% Coal,

13% Nuclear,

3% Wood

63% Natural Gas,20% Coal,

15% Nuclear,

2% Wood

68% Natural Gas,13% Nuclear,

8% Solar,

6% Coal,

4% Wood,

3% Wind

Total Capacity (MW) 15,404 16,078 18,127
Total Output (MWh) 54,584,276 65,759,060 59,328,552 (includes 6.6 million MWh in demand reduction as required by EPA rule)
Cost of New Generation NA $1.9 billion $16.1 billion
Emissions (lbs CO2/MWh) 1132 1080 698

 

New Proposed Ozone Standard Adding to Regulatory Onslaught  

While the debate over EPA’s 111d proposal will carry on beyond next summer when a final rule is expected, another costly and important proposal by EPA for ozone standards should be heavily scrutinized. Local officials and economic development professionals should pay careful attention to both. If implemented, 111(d) will dramatically drive up electricity rates, and areas not meeting ozone standards will be shackled with a range of economic sanctions. Read more here.