Witnesses Describe How EPA’s Proposal Will Drive Up Electricity Rates
WASHINGTON, DC – The Energy and Power Subcommittee, chaired by Rep. Ed Whitfield (R-KY), today held a hearing to examine a draft of the Ratepayer Protection Act. The draft legislation seeks to empower states to protect families and businesses from higher electricity rates and other harmful effects of EPA’s proposed rule regulating carbon dioxide emissions from existing power plants, referred to by the agency as the Clean Power Plan (CPP). The legislation would allow for completion of judicial review of any final rule before requiring states to comply and would also provide a safe harbor if the governor determines that implementation of a specific state or federal plan would have significant adverse effects on the state’s ratepayers or the reliability of its electricity system.
“I am convinced that this proposed rule is on very shaky legal ground and may end up being remanded or even vacated by the federal courts. I am also concerned that implementation of this rule risks serious economic harm that states would be prohibited from addressing. The Ratepayer Protection Act provides solutions to both these legal and implementation problems,” said Whitfield.
Members of the subcommittee questioned EPA Acting Assistant Administrator Janet McCabe over the costs of the rule and impacts for ratepayers and reliability and underscored the need to provide states with regulatory relief. Witnesses representing residential, commercial, and industrial consumers and ratepayers later testified about the considerable electricity rate increases and subsequent negative impacts expected under EPA’s rule.
Energy economist Eugene Trisko testified about the impacts of higher electricity costs on households and families, particularly for the most vulnerable populations like the poor and elderly who spend a larger portion of their income on energy needs. Trisko summarized the findings of studies examining the impacts of energy costs on American households across 31 geographically diverse states. The studies found that families’ incomes are shrinking while energy costs are rising, and energy expenditures are now representing a great percentage of household budgets. The Clean Power Plan will result in further electricity prices increases, placing an even greater strain on budgets. Trisko’s testimony outlined the following key findings:
- Recent consumer savings at the gas pump are being eroded by steady increases in electricity prices. Residential electricity represents 76 percent of total residential energy expenditures in the 31 states, on a household-weighted average basis.
- From 2005 to 2014, residential electricity prices in the 31 states increased overall by a weighted average of 38 percent in current dollars.
- Large electric price increases will result with the implementation of EPA’s proposed Clean Power Plan. A recent analysis by NERA estimates that the carbon rule will increase delivered electricity prices in the 31 states by 15 percent, on average, during the period 2017 to 2031.
- These average price increases mean that electricity prices will be 15 percent higher, on average, each year under the Clean Power Plan than they would be without the CPP. Peak year electric price increases during this period average 22 percent for the 31 states.
- Lower-income families are more vulnerable to energy costs than higher-income families because energy represents a larger portion of their household budgets. Data presented in the 31 state reports show that minorities and senior citizens are disproportionately represented among lower-income household.
To view a summary of the findings, click HERE.
In addition to the burden placed on cash-strapped American families, the energy price increases caused by the Clean Power Plan would hit states’ manufacturing sectors and energy-intensive industries. Paul Cicio, President of the Industrial Energy Consumers of America, praised the Ratepayer Protection Act for providing states with the necessary flexibility to protect their consumers and competiveness. “All costs of the proposed rule will be passed onto us, the consumer and will directly impact competitiveness and jobs. It is not prudent for states to make decisions, for example, to force the costly shutdown of coal-fired power plants to meet a compliance target, when the CPP could be substantially changed.” Cicio testified that the Clean Power Plan and other EPA regulations could drive industrial electricity prices up by 33.7 percent by 2025.
Lisa Johnson, CEO and General Manager of Seminole Electric Cooperative, Inc., testified on behalf of the National Rural Electric Cooperative Association. She explained the substantial harms from the rule, including the electricity price increases, threats to reliability and stranded assets for Florida consumers and the negative effects to the state’s fuel diversity. She testified that the Ratepayer Protection Act “will provide both Seminole, and the State of Florida, with significant protections against massive rate hikes and damage to the reliability of Florida’s grid due to EPA’s CPP.”
Kevin Sunday testified for the Pennsylvania Chamber of Business and Industry. He stressed the need for affordable, reliable energy and warned against the drastic economic effects of EPA’s rule. “Unfortunately, the EPA’s proposal threatens Pennsylvania’s biggest competitive advantage, as it will drastically change the way Pennsylvania produces and uses energy. This change is likely to come with a significant economic impact to the business community, as well as threaten reliability across the grid. Even more disturbingly, the significant costs of this rule by the EPA’s own admission will result in relatively small reductions in global emissions, likely soon to be eclipsed by development abroad.”
Full committee Chairman Fred Upton (R-MI) concluded, “States can and should be a necessary check on EPA’s otherwise one-sided authority to change a state’s electricity system and do so without regard to the consequences. The Ratepayer Protection Act is a sensible approach to addressing the very serious problems with the administration’s plan. Washington does not always know best and I urge all of my colleagues to join this effort on behalf of jobs and affordable energy.”