EIA in hot seat ahead of House vote on Clean Power Plan

By Jean Chemnick | 06/24/2015 01:08 PM EDT

The nonpartisan U.S. Energy Information Administration found itself in the crossfire of a congressional war over the Obama administration’s flagship climate rule today, with partisans on both sides of the issue using its findings to support their point of view.

The nonpartisan U.S. Energy Information Administration found itself in the crossfire of a congressional war over the Obama administration’s flagship climate rule today, with partisans on both sides of the issue using its findings to support their point of view.

Howard Gruenspecht, deputy administrator of the Energy Department analytical office, testified before subcommittees of the House Science, Space and Technology Committee on the same day the House is set to vote to scuttle U.S. EPA’s Clean Power Plan and as the rule’s friends and foes rushed to play up its costs and benefits.

Gruenspecht told the committee that EIA’s May analysis of the proposal, completed at the request of the science panel’s Chairman Lamar Smith (R-Texas), was not intended to be a comprehensive assessment of the rule’s value (EnergyWire, May 22). In his testimony, he stressed that EIA was restricted by mission and expertise to looking at the proposal’s effect on the electricity sector and the economy.


"It is not a cost-benefit analysis," he said.

But the May analysis has provided substantial ammunition, especially for opponents of the draft rule. One of its most widely circulated findings is that the rule would increase the rate of coal-fired power plant closures from the 40 gigawatts that are projected in a business-as-usual scenario to 90 GW — with most of the retirements happening in the early years of the rule. The bulk of that power would be offset with gas, though renewables would ramp up in later years.

The analysis also shows that ratepayers would pay more for power as the rule phases in during the 2020s, though not as much as groups opposed to the rule have projected. But some regions of the country would see very significant rate hikes — in the neighborhood of 10 percent — even when the rule is fully implemented in 2030, including the Southwest.

"On average, we show higher electricity bills, but not as much as the electricity prices," Gruenspecht told the committee. Proponents of the EPA rule regularly argue that it will spur dramatic gains in demand-side efficiency, and EIA showed that would happen to an extent and would have a moderating effect on energy bills. But the rule’s flexibility might work against those efficiency gains, with utilities reaching for gas and renewable energy as lower-cost alternatives to efficiency.

The analysis showed that the rule would contribute to a small decline in U.S. gross domestic product over the next 25 years of not more than a quarter of 1 percent.

Republicans on the committee seized EIA’s findings as evidence that the rule would strangle the U.S. economy, kill coal-fired generation and hurt low-income ratepayers.

"This is a continuation of the administration’s ‘war on the poor.’ I will once again remind my colleagues that while we might be able to absorb electricity rate increases, many of our constituents do not have that ability," said Rep. Jim Bridenstine (R-Okla.) who chairs the panel’s Environment Subcommittee.

Rep. Lamar Smith (R-Texas), the chairman of the full committee and a staunch opponent of EPA, noted that without cooperation from other countries, the rule’s economic pain will come with little environmental gain as carbon dioxide emissions soar overseas.

"The EPA should not saddle the American people with extensive and burdensome regulations, especially if the regulations have little environmental impact," he said.

Smith, Bridenstine and others said the House’s likely passage later today of the measure, H.R. 2042, would be a first step toward disarming EPA.

But panel Democrats and Susan Tierney, senior adviser at the Analysis Group, noted that EIA acknowledged it had not looked at any of the benefits of the Clean Power Plan — including those that come from avoiding up to 625 million metric tons of CO2. In fact, the EIA assessment hints that EPA’s rule might overperform its target, cutting power-sector emissions by as much as 36 percent compared with 2005 levels by 2030 instead of 30 percent.

This will help safeguard public health, avoid wildfires and other climate-driven extreme weather events and protect infrastructure — all of which will deliver economic savings to society, they argued.

Tierney, a former state regulator who has become a perennial Democratic invitee at hearings on the Clean Power Plan, said the EIA analysis was pessimistic in a number of key ways. It does not take into account the potential of the rule to spur innovation in the form of "disruptive" technologies, she said. Long-term assessments of the impact of regulations frequently overstate their cost, she said, because it is impossible for analysts to predict how the private sector may respond to limit the cost of compliance.

And Rep. Alan Grayson (D-Fla.) said the rule would prevent industry from unloading its negative externality — carbon — onto society for free.

"It’s basically like dumping your trash in your neighbor’s backyard," he said at the top of the hearing, panning efforts to pre-empt the EPA rule as "incredibly shortsighted." The rule is likely to spur the growth of new U.S. industries, he said, contributing more to the economy than EIA could foresee.

While EIA did not seek to calculate the economywide impacts of the rule, Republicans invited two other witnesses who attempted to do so.

Stephen Eule of the U.S. Chamber of Commerce’s Institute for 21st Century Energy, touted the chamber’s analysis that the Clean Power Plan would lead to compliance costs in excess of the administration’s own social cost of carbon. Kevin Dayaratna of the conservative Heritage Foundation extrapolated from EIA’s data to argue that the existing power plant rule could cost the U.S. economy nearly 80,000 jobs by 2030.