By Andrew Restuccia - 08/18/11 10:40 PM EDT
Utility industry claims that looming Environmental Protection Agency rules for power plants will create an economic “train wreck” are overblown, the nonpartisan Congressional Research Service (CRS) says in a new report.
Because EPA has yet to propose or finalize many of its clean air regulations, industry-sponsored studies predicting economic calamity “effectively underestimate the complexities of the regulatory process and overstate the near-term impact of many of the regulatory actions,” CRS says in an Aug. 8 report that has been circulating on Capitol Hill in recent days.
But CRS says the public health benefits of the regulations — which EPA says would prevent thousands of premature deaths and illnesses — outweigh the costs.
“The costs of the rules may be large, but, in most cases, the benefits are larger, especially estimated public health benefits,” the report says.
The report analyzes studies by the Edison Electric Institute and the North American Electric Reliability Corporation that say EPA’s regulations amount to a “train wreck” that will hobble the economic recovery. EPA opponents have long pointed to the studies in objecting to the rules.
But the August CRS report says the studies don’t reflect the reality of EPA’s regulations.
“The studies sponsored by industry groups (EEI and NERC) were written before EPA proposed most of the rules whose impacts they analyze, and they assumed that the rules would impose more stringent requirements than EPA proposed in many cases,” the CRS report says.
In addition, CRS notes that the regulations are likely to change in the coming months and, once finalized, facilities will have “several years before being required to comply.”
The report also dismisses concerns that the regulations will result in the shuttering of coal-fired power plants. American Electric Power and other utilities have said the pending rules will force the closure of plants.
“The primary impacts of many of the rules will largely be on coal-fired plants more than 40 years old that have not, until now, installed state-of-the-art pollution controls,” the report says. “Many of these plants are inefficient and are being replaced by more efficient combined cycle natural gas plants, a development likely to be encouraged if the price of competing fuel — natural gas — continues to be low, almost regardless of EPA rules.”
Many utilities have installed the necessary technology to comply with the regulations, the report says, noting that for those plants “costs will be minimal.”
More broadly, the report says that industry studies go about evaluating the costs of EPA rules all wrong. The studies can’t accurately predict costs on a national or regional level because they are site-specific, the report says.
“In reality, evaluating regulatory impacts, compliance costs, and possible retirement decisions depends on facility-specific considerations — micro, not macro,” the report says. “Utilities and states will be affected differently.”
Lastly, the report downplays concerns from Republicans like Sen. Lisa Murkowski (Alaska) that EPA rules will affect power-grid reliability.
“There is a substantial amount of excess generation capacity at present, due in part to the recession and also due to the large number of natural gas combined cycle plants constructed in the last decade, muting reliability concerns,” the report says.