King Op-Ed: New EPA Rules Could Force Electricity Rates Up 12.1%

August 17, 2011

State Representative Phil King

The federal Environmental Protection Agency (EPA) has implemented two new rules, which should greatly concern every Texan. If not stopped, these new regulations will prove extremely detrimental to Texas’ economy.

One rule is called the Cross-State Air Pollution Rule (CSAPR). The second is the Utility Maximum Achievable Control Technology Rule (MACT), which is intended to reduce air pollutant emissions from coal-fired power plants. These new federal regulations will almost certainly force many Texas power plants to shut down resulting in much higher electricity rates for Texans and potentially causing blackouts across our state.

The EPA has admitted that, combined, these regulations will cost the nation’s electric power sector tens of billions of dollars in capital investments. Based on EPA’s projections, these regulations are among the most expensive ever proposed on the electric generation industry. And who pays for these cost increases? As with any business, the costs will be passed down to consumers.

So, is there an upside? Is there a health benefit to Texans that justifies these new, costly regulations? Well, it doesn’t appear so. According to EPA’s own statements, the majority of the emissions targeted by the new regulations are emissions regulated by rules that are already in place! For example, with its new MACT rule, the additional emissions regulated will only constitute 0.004 percent of the “total monetized health benefits.” Now, I’m not an environmental engineer but that doesn’t sound like much return for tens of billions of dollars of expense. To add federal insult to injury, Texas’ own clean air program has shown huge reductions in emissions since 2000, cutting emissions more in that time period than any other state.

National Economic Research Associates (NERA) analyzed the impact of these new EPA rules and the results are disturbing to say the least. NERA projects that new regulations will result in a nationwide cost of $184 billion; a nationwide average electricity price increase of 11.5% (12.1% increase in Texas); a nationwide net employment loss totaling 1.44 million job-years by 2020; and 15% of the nation’s coal generating plants will have to be retired prematurely. These statistics are staggering!

During this brutal summer, Texas’ electric grid has barely escaped blackouts. These new EPA regulations could force electric generators to shut down 18 coal plants in Texas by as early as next January. Barry Smitherman, the former chair of the Texas Public Utility Commission, recently stated that as much as 11,000 megawatts of coal-fired generation in Texas may be shut down, accounting for thousands of lost jobs.

So, where does this leave us? In yet another battle with a federal agency that is simply out of control. In an effort to get additional answers, I spoke to the new chair of the Public Utility Commission of Texas and was assured that the Commission, numerous state officials, and many in the electric power industry are appealing to the EPA for a change, or at least a delay in the implementation of these new regulations. However, in the meantime, please call your elected representatives in Washington, DC and request that these rules be reconsidered. Since the EPA is an executive agency it answers to the President, however, Congress may change the statutes under which EPA operates – and that is where your voice can help. This is a critical issue for Texas and requires our foremost attention.

State Representative Phil King serves Parker and Wise counties in the Texas House of Representatives.