GAO estimate may lowball effects of EPA coal plant regulations

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Michael Bastasch DCNF Managing Editor
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A new report by the Government Accountability Office (GAO) found that four major EPA regulations could cost the United States as much as 12 percent of its coal-fired power generating capacity — and even that figure may be way too low.

“The GAO report is almost certainly an understatement, and possibly a massive understatement, of the problems caused by EPA’s regulations,” Dan Simmons, director of regulatory and state affairs at the Institute for Energy Research, told The Daily Caller News Foundation.

The report was requested by Democratic Sen. Jay Rockefeller of West Virginia, a coal industry critic and chairman of the Senate Committee on Commerce, Science, and Transportation. It analyzed twelve studies that estimate energy companies’ responses to the Cross-State Air Pollution Rule (CSAPR), the Mercury and Air Toxic Standards (MATS), Coal Combustion Residuals (CCR), and a section of the Clean Water Act that regulates cooling water intake structures.

The GAO concluded that these regulations could shutter up to 12 percent of the country’s coal-fired capacity, with one study projecting that the Midwest could lose up to 18 percent.

“GAO does not appear to consider actual announcements from electric generators of how many gigawatts are going to close as a result of EPA’s rules,” Simmons added.

According to recent research by IER, more than 10 percent of the country’s coal-fired capacity will be lost because of only two of the four regulations the GAO studied.

“[A]nd that doesn’t include the other rules that the GAO was supposed to look at,” Simmons added.

In total, CSAPR and MATS will force 34 GW of electrical generating capacity to retire, mostly coming from coal plants, while EPA modeling initially projected that only 9.5 GW would be retired because they didn’t include actually announced power generator closings.

The Energy Information Administration (EIA) estimates that 27 GW of coal-fired capacity — 8.5 percent of the country’s total — will be retired by 2016.

“Reality shows that far more generation is going to close than EPA thought,” Simmons said.

“Hardly a week goes by without new announcements that more electrical generators are shutting plants to deal with EPA’s regulations,” Simmons continued. “The amount and the pace has surprised everyone, but unfortunately it fits in with President Obama’s stated goal of ‘you can build a coal-fired power plant, but it will bankrupt you.'”

Some parts of the South could see electricity prices skyrocket by 13.5 percent, as they more reliant on coal-fired electricity generation.

Two of the studies examined found that the annual costs of these four EPA regulations range from $16 billion to $21 billion over the coming years, according to the GAO.

The EPA estimated annual costs of compliance of each regulation would be $10.2 billion for MATS, $853 million for CSAPR, $600 million to $1.5 billion for CCR, and $397 million for Section 316(b).

“Additional costs could be incurred to build or acquire new generating capacity or to upgrade transmission systems due to unit retirements,” according to the GAO report.

“Unfortunately this is just a part of their long-term strategy to bankrupt the coal industry,” Simmons concluded.

Rockefeller recently accused the coal industry on the Senate floor of attacking “false enemies” and accusing them of using “scare tactics.”

“It’s not too late for the coal industry to step up and lead by embracing the realities of today and creating a sustainable future. Discard the scare tactics.  Stop denying science,” Rockefeller said. “The reality is that many who run the coal industry today would rather attack false enemies and deny real problems than find solutions.”

Rockefeller voted against legislation proposed by Republican Sen. James Inhofe of Oklahoma that would have blocked EPA’s MATS rule from being implemented.

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