Friday, January 20, 2012

Congressional Research Service Confirms Air Toxic Rule Will Not Spike Power Reliability or Rates

Could it be that the Wall Street Journal editorial page that has been lambasting the EPA Air Toxic rule has rested its opinion on false information?  A shocking thought, but the recent review of the rule by the non-partisan Congressional Research service or "think tank" of Congress suggests attacks on the EPA rule are hot air.

The Congressional Research Service finds in a report that the EPA's Utility MACT rule or Air Toxics rule will not cause the lights to go out or electricity price spikes. Here is the link to the CRS report:

CRS notes that the vast majority of America's electricity generation capacity meets the requirements of the rule.  Specifically it states that 56% of coal fired power plants have controls that comply with the rule and 55% of the  nation's electricity supply comes from natural gas, nuclear, and renewable plants, all of which meet the rule.

Approximately 15% of the nation's total capacity does not currently meet the requirements of the rule that goes into effect in January 2015. These plants can install pollution controls, refuel with gas, or retire.

CRS confirms that the nation has substantial excess generation reserves and most retirements of old coal plants that may take place generally are in locations of large excess reserve margins.  For that and other reasons, CRS writes: "As a result, it is unlikely that electric reliability will be harmed by the rule."

Another reason the lights will not go out is that the nation builds new generation every year that typically exceeds electricity plant retirements.  Indeed EIA's most recent data shows more than 16,000 megawatts of new generation came on line in 2011, while less than 3,000 megawatts retired.

What about the impacts of the rule on national electricity prices? The rising amount of new generation also helps  keep electricity prices low in jurisdictions where markets and not regulators set generation prices.

CRS states that: "Electricity prices have declined more than 20% in real terms since 1980.  The impact of price changes would be relatively small compared to this downward trend, and well within the normal range of historical price fluctuations."

The Air Toxic rule will not turn the lights out, will not cause any noticeable impact on national electricity prices, but will significantly reduce air pollutants.

1 comment:

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