South Carolina: The perfect case study for new EPA power plant rules

The Environmental Protection Agency (EPA) has released proposed rules for reducing carbon emissions from the nation’s power plants in an effort to address the negative impacts of climate change.  Power plants contribute about 40 percent of the country’s carbon pollution.

Transitioning to a clean energy economy is thus very important and it is clear that EPA rules for states to control carbon pollution are needed.

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While the U.S. Chamber, utilities, elected officials and other business organizations argue that these new rules will drive up the cost of energy thus hurting consumers and the economy, South Carolina is the perfect case study to dispel these fears.

In 2009 the state’s largest utility, South Carolina Electric and Gas (SCE&G), and the state-owned utility company, Santee Cooper, launched construction of two nuclear reactors.  State law had been changed several years earlier allowing for SCE&G to raise electric rates every year to fund the construction costs of the new plants as they are built instead of waiting until they are online as is normally the procedure.

While the nuclear plants were pitched as an investment for future reliable and less costly energy, the effort can also be viewed as SCE&G’s plan for reducing carbon emissions by reducing the need for new coal plants and enabling older coal plants to be retired.  The cost to consumers for this private utility effort to “reduce carbon emissions” has been an increase in rates of 11.82 percent since 2009.  SCE&G is asking for another rate increase this year of 2.99 percent to fund the construction of the nuclear plants scheduled to open in 2018 and 1019.  At least three more of these contrition rate increases are expected.

When the rate hikes for “reducing carbon emissions” are combined with SCE&G’s other rate increases it has received since 2009 for normal operational costs, South Carolina consumers, residential and commercial, have seen a 37 percent hike in electricity rates in the last 5 years.

So, has this dramatic increase in the cost of electricity harmed the economy of South Carolina as the critics predict will happen under the new EPA rules?

In her political campaign ads, South Carolina Governor Nikki Haley (R), who was first elected in 2010, proudly points to the state’s strong and growing economy.

“The Nikki Haley jobs record.  Fastest growing economy on the East Coast.  Lowest unemployment rate in six years.  Most South Carolinians with jobs, ever.” 

The South Carolina case study of energy investments, consumer energy costs and economic impact have shown us that heavy investments in alternative energy can be done without hurting the economy, even when electricity rates increase dramatically.  In fact, the high-paying construction jobs created by investing in nuclear energy have helped South Carolina’s economy. 

This is not an endorsement of nuclear power because the South Carolina investment could have been in solar or off-shore wind energy with the same positive impact on the economy and reduction in carbon pollution while not having the other negative aspects of nuclear.

We don’t know what the overall costs will be to comply with the proposed EPA rules.  The U.S. Chamber which represents the fossil fuel industry has predicted the exaggerated national figure of $50 billion per year until 2030.  But we do know there will be some small costs to implement these new rules.

Fortunately, South Carolina has demonstrated that states and utilities can invest in alternative energy and that the increased consumer costs, even if considerable, do not hurt the overall economy or reduce overall employment.  However, these investments will protect us from the future negative effects of climate change that are guaranteed to hurt our economy and cost jobs.

Again South Carolina is a good example of this threat.  Through the work of the South Carolina Small Business Chamber of Commerce and the American Sustainable Business Council along the Palmetto State’s coast (SCBARS.org), we know that small business owners understand the threat of rising seas caused by climate change. The scientific data showing projected future sea level rise of only 2-3 feet is enough to inundate some of the state’s business and residential areas.  Only by transitioning to a clean energy economy and focusing on energy efficiency will we get carbon pollution under control and avoid even higher rising seas that will destroy much of South Carolina’s coastal tourism economy. 

The proposed EPA rules will help us get there.

Knapp is president and CEO of the South Carolina Small Business Chamber of Commerce and co-chair of the American Sustainable Business Council Acton Fund.