IER Co-Signs Free Market Coalition Comment on EPA’s Power Plant Rule

In addition to submitting our own formal comment on EPA’s proposed carbon dioxide emission rule for existing power plants, IER has co-signed a free market coalition comment written by Marlo Lewis of the Competitive Enterprise Institute (CEI). The CEI coalition comment finds EPA’s power plant rule to be, “illegitimate and unlawful.” The comment explains that the “implementation costs are likely much greater than EPA estimates. It will increase electricity prices and raises reliability concerns. Its putative climate benefits are illusory. This regulation should be withdrawn.” Here are the main points from the comment:

EPA’s Rule is Illegitimate

The EPA’s climate rule is an egregious example of executive overreach. Federal agencies are not allowed to make laws, only enforce them. But as the coalition comment explains, EPA’s rule “stretches CAA §111(d) beyond all recognition. The provision does not authorize EPA to restructure state electricity markets, revise state electricity policies, or establish statewide caps for CO2.” As such, the rule is unlawful and should be withdrawn.

The Rule is Unlawful

There are many reasons the plan is illegal under the Clean Air Act, including the following:

• EPA’s Pollution Standard rule–the legal prerequisite for the climate rule–is unlawful because it requires Carbon Capture Storage technology which is too expensive for economical use and has not been “adequately demonstrated” as the law requires.
• CAA section 111(d) (the section the climate rule is under) does not allow for double-regulation of sources that are regulated under another section of the CAA. For instance, many power plants are already subject to emission regulations under the Mercury Air Toxics Standard (MATS).
• A state’s electric power sector is not a specific “source” of emissions and therefore a performance standard cannot be set for an entire state, as EPA has proposed.
• The CAA calls for regulated entities to employ the “best system of emission reduction” (BSER). This requirement does not authorize EPA to dictate state policies regarding renewable energy, electricity dispatch, or demand management.
• Section 111(d) was intended for “highly localized” pollutants, not widespread air pollutants that are typically covered under the NAAQS program. As CEI puts it, “Carbon dioxide emissions are the most ubiquitous byproduct of industrial civilization.”
• Performance standards are intended to improve performance by reducing emissions per unit of output, not reduce emissions by limiting production like the climate rule does by shuttering coal plants.
• This rule for existing sources is more stringent than the rule for new sources and regulated entities not covered in the rule for new sources, neither of which are permitted under the CAA.
• EPA claims it has authority to enact state renewable mandates, fleet dispatch policies, or rebates for programmable thermostats if states to not come up with an “adequate” state implementation plan.
• EPA’s top-down approach conflict’s with states’ local knowledge to propose standards they consider achievable.

The Rule Infringes on States’ Rights and Citizen Choice

Competition among states gives citizens the option to vote with their feet and leave states with unpopular policies. According to CEI, “By penalizing excessive taxation and overregulation, interstate competition for the talents, assets, and allegiances of citizens may also restrain politicians in states with poorly performing economies…”

A 2014 report titled “Rich States, Poor States” found that “10 states with the cumulative net in-migration also have electricity prices at or below the national average, whereas seven of ten states with the greatest cumulative net out-migration have higher-than-average electricity rates.” This shows how important electricity prices are in promoting a competitive economic atmosphere.

EPA claims states are granted ample “flexibility” under the climate rule. However, the only “flexibility” the states are given is whether they want to get punched in the face or hit over the head. Furthermore, the climate rule guarantees that states choose more regulation over less regulation.

The Climate Rule will Increase the Price of Electricity and Decrease Reliability

The proposed rule will raise the price of electricity by forcing states to replace economical coal capacity with more costly and less reliable renewable generation. Still, EPA states that even though electricity rates will rise, electricity bills will go down due to improvements in energy efficiency. The comment cites the Virginia State Corporation Commission (SCC) staff, which is in charge of regulating utility prices in Virginia, because they believe that this is a highly unrealistic scenario. Specifically SCC staff said:

Contrary to the claim that ‘rates will go up, but bills will go down,’ experience and costs in Virginia make it extremely unlikely that either electric rates or bills in Virginia will go down as a result of the Proposed Regulation.

Finally, by prioritizing intermittent renewable sources of energy above reliable ones, the proposed rule will make it more difficult to balance the amount of electricity demanded by consumers with the amount of electricity generated–a difficult task that must be performed in real time. In short, it decreases the reliability of our grid.

The Climate Rule’s Benefits Are Illusory

The Climate rule does not have a sizable impact on climate change–the very problem it is supposed to mitigate. EPA’s own model shows that the rule will produce less than a 0.02 degree Celsius change in global temperature by 2100. This is “…too small to have any discernible impact on sea-level rise, weather patterns, polar bear populations, or any climate-related variable people care about.”

EPA Should Withdraw the Rule

This rule is illegal. It lacks the support of the American people. It imposes excessive costs and only produces illusory benefits. The rule artificially increases the cost of energy from energy sources in hopes that that will finally make renewables more competitive, and it leaves Americans with the enormous price tag. Given this evidence, the EPA should withdraw the rule.