Recently, electricity ratepayers received a huge gift from the Supreme Court of the United States. The justices voted to issue a stay halting the implementation of the U.S. Environmental Protection Agency’s Clean Power Plan (CPP).
For those unacquainted, the CPP is a mandate from the Obama administration for electricity producing power plants to reduce CO2 emission by 32 percent by 2030. It was, in effect, a federal takeover of our nation’s electrical power grid, an entity that has always been regulated by the states.
Proposed in June 2014 and entered into the Federal Register on Oct. 23, 2015, the plan included strategies to reduce CO2 emissions including lowering heat rates of emissions from existing coal-fired power plants, replacing coal-fired plants with ones using natural gas or alternative energy sources, and reducing the electricity consumer can use.
Implementation of the CPP would have been devastating for consumers and our nation on two fronts. First, it would have forced rate increases due to the enormous costs of retrofitting power plants. A study, by Energy Ventures Analysis, estimates that by 2030, consumers would pay an additional $214 billion, with 45 states facing double-digit increases for wholesale electricity and 16 states facing increases of 25 percent or more.
Europe’s pursuit of a similar mandate resulted in a 55 percent increase in residential electricity rates, and a 26 percent increase for industries. Australia’s attempts to employ its carbon tax were rejected after $15 billion in damages were felt in its economy within two years. In Canada, its abandonment of coal-powered plants caused electricity rates to skyrocket.
Second, the CPP would have led to potentially catastrophic electricity shortages because it would reduce the number of plants producing electricity. In one of the absurdities of CPP, the mandate requires retrofitted power plants to meet a higher standard than new plants. Due to projected compliance costs ($64 billion), 41,000 megawatts of power plant capacity would be forced to close (that’s enough to power 24 million homes) and 40 percent of coal-fired power generation would be displaced.
It is important for consumers to know that U.S. coal-burning electrical generation has already faced attacks in the past few years. Thanks to the Obama administration, 411 coal-fired power-generating units have been closed. This amounts to 101,000 megawatts of electricity. Tragically, there has been no environmental benefit to show for this. In fact, regarding CPP, the EPA itself admitted the amount of CO2 reduction would have no effect on the administration’s assault on global warming/climate change.
When the rule first became public, 27 states including Florida, immediately filed lawsuits to halt its implementation. Looming on the horizon was a September 2016 deadline for every state to submit a plan for reduction or request a two-year extension to consider public opinion.
The Supreme Court’s wise action to halt implementation has taken all regulation mandates and deadlines off the table -- and fortunately for Florida’s electricity consumers, price increases and potential electricity shortages too. The sad and surprising passing of Justice Antonin Scalia further underscores the importance of the judicial role of checks and balances with respect to questions of executive overreach and agency rulemaking that runs counter to the prescribed role of our legislative branch.
Dan Peterson is the director of the Center for Property Rights at The James Madison Institute
