Energy and Commerce Leaders Continue to Seek Administration’s Cost Estimate for Utility MACT Rule as Electricity Prices Rise

June 8, 2012

WASHINGTON, DC - Republican members of the House Energy and Commerce Committee are once again asking the administration to provide a complete estimate of the cost of the Utility MACT rule announced last December. Members wrote today to EPA Administrator Lisa Jackson to follow up on previous committee requests. This is the fourth letter the committee has sent administration officials this year requesting a full and transparent accounting of the rule.

The committee recently received a partial response from EPA providing an estimate of $35 billion for the capital component of the total cost, but the agency has still not provided total compliance costs or the “sticker price” for the rule, including present value of both capital and non-capital costs. Members seek a complete estimate from EPA given the rule’s effects on consumers, energy prices, and the overall economy. Imposing such large costs on the energy sector and consumers during a bad economy is unprecedented.

The letter to Jackson cites the results of PJM Interconnection’s recent auction showing an increase in electricity prices. The members wrote, “Our concerns about the total cost of the rule are based on the significant electricity price increases that may be triggered in certain regions of the country by this and other recent or pending EPA power sector rules. As you may be aware, the 13-state PJM Interconnection Region recently announced that capacity prices for 2015-2016, the first year that electricity generators will be required to comply with the Utility MACT rule, will be 8 times higher than the price that was set for 2012-2013. As explained by PJM, the ‘auction was impacted by an unprecedented amount of planned generation retirements (more than 14,000 MW) driven largely by environmental regulations, which drove prices higher than last year’s auction.’” 

Independent analysts estimate that EPA’s Utility MACT rule is the most expensive regulation the EPA has ever issued for power plants, and the committee’s own analysis of the rule suggest its costs could total over a hundred billion dollars.

”As set forth in the attached information requests, based on the estimates and assumptions published by EPA, it appears the total cost for the Utility MACT rule may exceed $108 billion. We specifically seek EPA’s response concerning whether this reflects a reasonable estimate of the total present value cost of this regulation rule, based on EPA analysis and assumptions.  We have continuing concerns about such an unprecedented, expensive rule with such far-reaching impacts across many states,” wrote the members.

For a full copy of today’s letter, click here.

For a copy of the committee’s original letter to EPA, click here.

For copies of the committee’s letters to the White House, click here and here.

For a copy of EPA’s initial response, click here.