Utility groups trade blows on new EPA emissions rules

Coal-heavy power companies and their cleaner cousins are continuing to spar over new air pollution regulations from U.S. EPA, releasing competing analyses this week on the effects of a pair of rules that would make coal plants spend billions of dollars to control toxic chemicals and emissions that lead to soot and smog.

Those two regulations -- the Clean Air Transport Rule, which would cap key emissions that travel across state lines, and the "Utility MACT" rule, which would set limits on mercury and other toxic chemicals -- would cost power companies an extra $17.8 billion per year, according to a report released today by a coal-industry group.

The American Coalition for Clean Coal Electricity, a trade group including coal companies and coal-heavy utilities such as Southern Co. and American Electric Power Co. Inc., paid for the study by New York-based National Economic Research Associates Inc.

NERA analysts concluded that those new costs would lead to a 13 percent drop in coal-fired generation and a 26 percent increase for natural gas. Electricity prices would rise by an average of 11.5 percent across the country, with double-digit hikes for ratepayers in 21 states.

On balance, those increases would cause the economy to shed about 144,000 jobs for the next decade, the study says, despite claims from supporters that the rules will create construction work. EPA estimated that the rules would have little effect on jobs, and might increase total employment in the long run.


The new study was welcomed by lobbyists for coal-heavy utilities, who are hoping to derail the rules on Capitol Hill by arguing that they will hinder an economic recovery. They are looking to lawmakers such as Rep. Ed Whitfield (R-Ky.), the chairman of the House subcommittee that oversees the Clean Air Act, who is crafting a bill to that effect.

"If anyone comes to you in the dark of night and says, 'I have a proposal to increase electricity costs across the board, and it's a job creator,' do not buy anything from that person," said Scott Segal, a lobbyist at Bracewell & Giuliani LLP, during a debate on the rules yesterday at the Environmental Law Institute. "The notion that a very expensive rule is a great way to create jobs -- give me that money and I will create far more jobs."

But other utilities, which get their electricity from other fuels and have installed pollution controls on their coal plants, say the rules are needed to level the playing field.

And environmental and public health groups say those costs are outweighed by the health and environmental benefits of the rules. Combined, the two proposals would prevent between 20,800 and 53,000 premature deaths each year as well as a slew of heart attacks, asthma flare-ups and other health problems, according to EPA projections.

Analysts for the Clean Energy Group, a coalition that includes Exelon Corp. and six other utilities, released a competing report yesterday saying that the costs are manageable and won't make the electric grid less reliable.

Sixty percent of coal-fired boilers already meet EPA's proposed limit on mercury emissions, while 73 percent would comply with the rules for acid gases and 70 percent would have emissions below the particulate matter (PM) standards, Michael Bradley, the head of the utility group, said during the debate.

"While there will be companies that will need to make major investments to comply," Bradley said, "many are well on their way toward compliance."

Making the rest of the boilers comply with the toxics rules would cost $10.9 billion and achieving the proposed Transport Rule would cost another $2.9 billion per year, according to EPA estimates. But the agency pegged the monetized health benefits much higher -- in the hundreds of billions of dollars.

Some are skeptical. Among them is Jeff Holmstead, an attorney at Bracewell & Giuliani who was air chief at EPA under the George W. Bush administration.

He said yesterday that there isn't much risk posed by mercury and other toxic emissions from power plants. He said he also doesn't believe claims that emissions of fine particles are killing tens of thousands of people each year.

But John Walke, clean air director at the Natural Resources Defense Council, said it would be unwise to put off the pollution rules, which would replace air pollution standards that were struck down in court during the last administration.

"Just as when a battery of tobacco industry lobbyists argued that cigarettes don't cause cancer, the public doesn't buy the arguments of a handful of industry lobbyists over the expertise of pediatricians, American Lung Association doctors and the Environmental Protection Agency," Walke said.

Click here to read the NERA analysis.

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