By Institute for Energy Research ——Bio and Archives--July 9, 2015
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Recently, we witnessed a historic ruling by the Supreme Court in Michigan v. EPA. The court ruled that EPA illegally failed to consider the costs of the Mercury and Air Toxics Standard (MATS), which at $9.6 billion per year is one of the costliest regulations in U.S. history. The decision underscores the basic truth that the costs of regulations are critical to the rulemaking process. Unfortunately, it comes too late: utilities did not wait for the Court to weigh in and have implemented most the changes under MATS, shuttering a significant amount of coal-fired generating capacity. As AEP CEO Nick Akins said after the decision, “We’re not bringing them back. Once that ball gets rolling, it’s not going to change.” However, states have an opportunity to learn from the MATS experience. The EPA will soon finalize its so-called “Clean Power Plan” requiring states to reduce carbon dioxide emissions—the rule is expected to be even more costly than MATS. The Clean Power Plan effectively seeks to shut down functional existing sources and replace them with new (and sometimes unreliable) sources. This warrants an honest assessment of the cost of tearing down existing sources and building new sources. State public utility commissions should stand up and protect American families from the out-of-control and imprudent costs of this regulation, before it’s too late. Last week, the Institute for Energy Research (IER) released a report, The Levelized Cost of Electricity from Existing Generation Resources, which provides just what the Supreme Court ordered—a fresh look at the high cost of shutting down power plants. Using data from EIA and FERC, the report goes beyond standard estimates of electricity costs, which focus on new generation sources, and introduces a new measure of the cost of electricity from existing sources.Click here to read the full letter.
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The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.