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NRDC Acknowledges Spikes in Energy Costs for Consumers Thanks to Obama EPA Regulations
May 8, 2012

Posted by Katie Brown Katie_Brown@epw.senate.gov

NRDC Acknowledges Spikes in Energy Costs for Consumers Thanks to Obama EPA Regulations

The Natural Resources Defense Council (NRDC) wrote a letter to Senator Inhofe yesterday taking issue with a sentence included in his opening statement at a recent Environment and Public Works hearing. 

What NRDC did not challenge however, was the overall point Senator Inhofe was making - in fact, in drawing attention to one particular statistic, NRDC actually admitted that energy prices will spike due to the Obama-EPA's air regulations.

As NRDC said in its letter, "MISO (Midwest Independent Transmission System Operates) has never estimated that the Mercury and Air Toxics Standards could increase electricity rates by as much as 50%.  An October 2011 MISO report on the impact from four EPA regulations on the power sector, not just the Mercury and Air Toxics Standards, indicated that factoring in ‘all the costs to maintain regulation compliance and system reliability, retail rates could increase 7.0 to 7.6 percent.'"

We very much appreciate NRDC reaching out to us, because by doing so, we have the chance once again to show how much the Obama-EPA is costing American families. Even NRDC cannot deny that electricity rates will increase; and whether NRDC wants to admit this or not, these increased rates will hurt the poor disproportionately, acting as a regressive tax imposed by the EPA. 

NRDC asked that a correction be made in the Congressional Record. We are happy to submit this piece as a clarification while pointing out the bottom line: the American people are feeling the economic pain from the Obama-EPA agenda - and under these rules, it's only going to get worse. 

In fact, future capacity prices, a significant component of future electricity rates, increased in the May 2011 PJM auction by 350% in the western region of PJM (an area covering parts of Pennsylvania, Maryland, New Jersey, Delaware, Virginia, West Virginia, Ohio, North Carolina, Tennessee, Indiana, Michigan and Illinois.).  PJM attributes the majority of this increase to the "installation of emission control technologies that are required to meet increasingly stringent environmental regulations." 

In explaining the effect of these capacity price increases, the Chicago Tribune reports that a four-fold increase in capacity prices translates into annual electricity price increases between $107 to $178 for ComEd customers (one of the utilities in the western region of PJM).  But this is just the beginning.  At this May's annual auction (we anticipate the results to be released within the next few weeks), future capacity prices in northern Ohio could go as high as $500/MW-day (according to Deutsche Bank).  This represents a change in 2 years of 1,700%.

And what does this mean for Americans? Manufacturers are the backbone of the US economy and affordable electricity is essential to their ability to grow and prosper. As an example of how electricity costs can affect a company's bottom line, according to Nucor Steel, one of the largest steel producers in the US, a 1 cent increase in the price of electricity results in cost increases of $120 million annually. So even small increases in electricity costs mean lost jobs and productive capacity.

According to the National Economic Research Associates, EPA's rules will cost the economy 1.65 million jobs by 2020.  This is echoed by the Maguire Energy Institute at Southern Methodist University, which concludes EPA's rules are threatening up to 1 million jobs in addition to the job losses that could occur in the coal and utility sector. These are the real outcomes of the Obama EPA's policies. 

NRDC is a well known enemy of coal and an avid supporter of President Obama's war on affordable energy.  This agenda is not about saving lives or improving the environment.  It's a calculated effort to kill coal in American electrical generation - and as NRDC and the President know all too well, in order to achieve that goal, electricity prices will have to "necessarily skyrocket."  We're just glad that NRDC is willing to admit that. 

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