By Amelia Schlusser, Staff Attorney
On March 23, 2015, U.S. Representative Ed Whitfield (R-Ky.),
Chairman of the House Energy and Power Subcommittee, introduced a discussion
draft of a bill titled the “Ratepayer Protection Act of 2015,” which would
allow states to “opt out” of complying with the Environmental Protection
Agency’s final Clean Power Plan.
The draft bill aims to dramatically weaken state compliance
obligations under the Clean Power Plan. First, the bill would extend the rule’s
compliance deadlines until final judgments are issued in all legal challenges
against EPA’s regulation, which could take years. Second, and more
significantly, the bill would exempt a state from adopting a plan to implement
the final rule if the governor determines that compliance would “have a
significant adverse effect on the State’s residential, commercial, or
industrial ratepayers” or “on the reliability of the State’s electricity
system.” A state could also refuse to implement a federal plan if these same
conditions are met. In determining whether compliance would adversely affect
ratepayers, the state must take into account any potential rate increases
associated with implementation of the Clean Power Plan or other federal or
state environmental regulations. In determining whether compliance would
adversely affect reliability, the state must consider the rule’s effects on the
state’s electricity generating resources, transmission and distribution
infrastructure, and projected electricity demands.
Rep. Whitfield argues that this legislation is necessary to
protect coal-dependent states, like Kentucky, from rising electricity rates. According
to the House Energy
& Commerce Committee website, the bill “seeks to empower states to
protect families and businesses from higher electricity rates and other harmful
effects of EPA’s pending rule to regulate carbon dioxide emissions from
existing power plants.” Whitfield described
the Clean Power Plan as an “unprecedented power grab,” and stated that his
“commonsense legislation” is necessary to protect states from “EPA’s damaging
overreach.” House Energy and Power Committee Chairman Fred Upton (R-MI) also expressed
his support for Whitfield’s legislation, stating, “[t]his bill is about
protecting families and jobs.”
Supporting Alarmist Claims With Questionable Data
Rep. Whitfield rationalizes his opposition to EPA’s proposed
rule by asserting that the Clean Power Plan will unreasonably burden
ratepayers. EPA estimated
that the rule’s annual compliance costs would range from $5.4 to $7.4 billion
in 2020 and range from $7.3 to $8.8 billion in 2030. Proponents of the
Ratepayer Protection Act, however, cautioned that the rule’s actual compliance
costs may be much higher than EPA projected. An April 10 memo
introducing the draft bill argued that according to “other estimates,” the rule’s
compliance costs could potentially range from $366 to $479 billion between 2017
and 2031.
The “other estimates” cited by the memo were drawn from a
NERA Economic Consulting report
prepared for the American Coalition for Clean Coal Electricity, the American
Fuel & Petrochemical Manufacturers, and the National Mining Association,
among others. While the industry-funded assessment did estimate that compliance
costs would be much higher than EPA’s projections, the report’s authors noted that
the data they applied in their analysis was not independently verified and may
not be accurate or complete. Moreover, the report projected that implementation
costs would be highest (i.e. $479 billion) under a scenario in which states
refused to use renewable energy, energy efficiency, and new nuclear power to
achieve compliance. These high compliance costs would instead be directly
attributed to rising natural gas prices.
Lamenting Costs While Ignoring Benefits
The cost projections favored by Rep. Whitfield fail to
account for the economic and social benefits that the Clean Power Plan would
provide. EPA estimated
that the final rule would contribute $55 to $93 billion in climate and health
benefits by 2030. The Agency projected that the rule would prevent 2,700 to
6,000 premature deaths resulting from air pollution, and would avoid 140,000 to
150,000 asthma attacks in children. By reducing power-sector CO2
emissions by 30% below 2005 levels, the rule could help to mitigate the impacts
from climate change, which cost the U.S. economy more
than $100 billion in 2012 alone.
The Clean Power Plan will also contribute to economic growth
and create significant new employment opportunities. A new
report by Industrial Economics and the Interindustry Economic Research Fund
estimated that the final rule would lead to 74,000 new jobs in 2020 and would
contribute an additional 196,000 to 273,000 new jobs each year between 2025 and
2040.
In the aggregate, the climate, health, and employment
benefits resulting from the final Clean Power Plan will more than offset state
compliance costs. Moreover, the draft rule proposed to provide states with
significant flexibility in deciding how to implement the rule, which should
enable states to develop strategies to reduce power sector emissions at the
lowest cost to ratepayers. For example, many states have substantial potential
to reduce electricity consumption (and thus emissions) through increased energy
efficiency, which is commonly the lowest-cost “source” of power available. In
addition, states can also implement the rule through increased deployment of
renewable energy resources, which can provide jobs and other economic benefits
while offsetting emissions.
A Transparent Attempt to Protect Coal Industry Interests
On Wednesday, April 22, the Energy and Power Subcommittee
conducted a markup
of the Ratepayer Protection Act, in which the subcommittee approved the
proposed bill by a vote of 17 to 12. The vote was entirely along party lines,
with 17 Republicans voting in favor and 12 Democrats voting against the
proposed legislation.
The subcommittee also voted against a series of proposed
amendments to the draft bill. One of these amendments would have allowed states
to opt out of compliance only if projected ratepayer cost increases were
expected to exceed
the costs of responding to climate change. Another amendment would require
a state to certify that a decision to opt out would
not have a significant adverse effect on public health. The subcommittee
also voted against an amendment
proposing to add a section declaring that “the Federal Government should
promote national security, economic growth, and public health by addressing
human-induced climate change through the increased use of clean energy, energy
efficiency, and reductions in carbon pollution.”
The subcommittee members’ failure
to approve these proposed amendments revealed the true objectives of the
so-called “Ratepayer Protection Act,” which have little to nothing to do with
protecting ratepayers. Instead, the proposed bill aims to protect the economic
interests of the coal industry by enabling states to choose not to comply with
federal air quality regulations. This transparent attempt at industry
protectionism at the expense of public health and welfare exposes a growing
disconnect between conservative lawmakers and the public they ostensibly represent.
If this proposed bill survives the
legislative process and actually gets signed into law (which is highly
unlikely, but not impossible), it will encourage coal-hungry states to opt out
of complying with the Clean Power Plan to the detriment of the electricity
system as a whole. The proposed regulation represents an opportunity for states
to modernize their electricity sectors and build a more sustainable, resilient
energy grid. States that refuse to implement the final rule will fail to invest
in new resources and technologies that would provide lasting benefits for power
consumers, and instead will continue to rely on outdated technologies and aging
infrastructure. The electricity grid is a highly interconnected system, and one
state’s refusal to modernize its power sector imposes additional risks on the
system as whole. Moreover, a refusal to deploy non-emitting electricity
resources will have long-term climate implications for current and future
generations. The Clean Power Plan provides an opportunity for states to start
transitioning to the electricity system of the future, and the Ratepayer
Protection Act represents an attempt to remain stuck in the past.
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