NOVEMBER 19, 2014 | IN ENERGY POLICY | www.powerlineblog.com
When the EPA announced in June its proposed climate change regulations that it admitted would do nothing about climate change, it also claimed that its aggressive restructuring of the American electric power sector would see cost reductions for consumers. You almost expected EPA Administrator Gina McCarthy to say, “If you like your utility rates, you can keep your utility rates.”
No one over the age of six, or not a member of an environmental organization, believes this of course. According to one recent round up of independent third-party assessments of what is likely to happen, utility rates for states that currently generate a lot of coal-fired power are going to go up by 25 percent or more:
U.S. electricity markets face years of higher prices as clean-air regulations shut more coal-fired power plants than earlier forecast, cutting supply and forcing producers to rely more on natural gas.
Standard & Poor’s estimates that 40 to 75 gigawatts (75,000 megawatts) of coal units may be shut by 2020, compared with announced permanent shutdowns of 27 gigawatts. About 18 percent of the closures expected through the end of next year will be replaced by natural gas and renewables, BNP Paribas SA forecast.
The loss of the cheaper coal units will boost power prices by as much as 25 percent on grids that serve about a third of the nation’s population, according to the Brattle Group, a Cambridge, Massachusetts-based consulting company. The biggest impact may be in the Midwest and Northeast, where demand for gas for heating jumps during the cold-weather months.
“We are really in for a wild ride for five to six years because of the amount of coal shutting down in such a short amount of time and the transformation toward more gas being used to generate electricity,” Philip Moeller, a member of the Federal Energy Regulatory Commission in Washington, said in an Oct. 23 interview. “Prices will definitely rise. The question is how much.”
It is not unusual to see warnings of high regulatory costs in an industry journal like International Coal Journal or Coal People, but in fact this story appears in Renewable Energy World, a journal that you’d think would be all for the new EPA regs that force the marketplace to tilt in their direction.
Photo Credit: Shutterstock