Clean Power Plan Will Add $214 Billion to Wholesale Electricity Prices

The second study this month projects significant costs, few benefits, from Obama’s carbon reduction plan for power plants

Washington, D.C. – Refuting the Obama administration’s claim that its Clean Power Plan will be virtually cost free, a new analysis of the regulation shows the president’s policy for reducing carbon dioxide emissions from the nation’s power sector will raise electricity costs significantly for families and businesses throughout the nation.

The analysis, by Energy Ventures Analysis (EVA), finds consumers will pay an additional $214 billion by 2030, with 45 states facing double digit increases in wholesale electricity costs and 16 states saddled with a 25 percent increase or more. Added to this total will be a projected $64 billion bill to replace an estimated 41,000 MW of power plant capacity that will be forced to close, enough to power 24 million homes.

The analysis, commissioned by the National Mining Association (NMA),
identifies the flaws in the CPP that ignore actual costs likely to result from replacing existing power plants using affordable fuel with plants using costlier fuel sources.

The findings demonstrate EPA has substantially understated the CPP’s costs to consumers in at least three ways:

• First, by failing to acknowledge the higher cost of natural gas required to replace the coal generation displaced in base load power.

• Second, by failing to recognize the cost impact on industrial and other natural gas customers who are outside the power sector.

• Third, by failing to fully account for the costs that consumers will pay for new power generation and transmission infrastructure necessary to replace coal generation that will be prematurely retired by the rule.

“EVA’s findings, together with a recent study by NERA, confirm the penalty that millions of consumers will pay for a policy that lacks congressional approval or environmental benefit,” said NMA CEO and President Hal Quinn. “The findings of both studies show there are no affordable choices for states under EPA’s costly power plan.”

In an attempt to transform the nation’s electricity system under the Clean Air Act, EPA mandates a 32 percent cut in U.S. CO2 emissions by 2030 from 2005 levels. To accomplish this, the CPP would displace 40 percent of total U.S. coal-fired power generation, but reduce global carbon dioxide emissions by less than 1 percent and global temperatures by 0.02 degrees Celsius by 2100.

While the benefits that EPA claims are doubtful, Quinn said the financial impact of the CPP for all consumers of electricity are not in doubt. “Governors should carefully weigh these costs before committing their states to this regulation,” said Quinn.