Wednesday, January 18, 2012

Congressional Research Service: EPA mercury/toxic rule for power plants will NOT mean lights out

H/T to BNA Daily Environment Report for bringing this to our attention.

This report on EPA's new mercury/toxic rules for coal power plants by the respected Congressional Research Service undercuts the propaganda by several big coal power companies including American Electric Power and Southern Company.

It concludes that the lights won't go out -- and that electric rates won't rise much. To quote from the report's conclusions:

A particular issue has been whether the standards will lead to retirement
of a significant number of electric generating units, with negative effects on the reliability of the power supply. EPA and many other analysts maintain that this will not be the case.

To address this question, this report reviews industry data on planning reserve margins and potential retirement of units that do not currently meet the standards. Based on these data, it appears that, although the rule may lead to the retirement or derating of some facilities, almost all
of the capacity reductions will occur in areas that have substantial reserve margins. Two areas that may have difficulty meeting reserve margins, Texas and New England, will experience few plant retirements and deratings, according to industry data. Furthermore, to address the reliability concerns expressed by industry, the final rule includes provisions aimed at providing additional time for compliance if it is needed to install pollution controls or add new capacity to ensure
reliability in specific areas. As a result, it is unlikely that electric reliability will be harmed by the rule.

Another potential concern, given the rule’s cost, is what impact it may have on the price of electricity. EPA estimates that the average price of electricity nationally will increase by 3.1% by 2015, as a result of the rule. Electricity prices have declined more than 20% in real terms since
1980. The impact of price changes would be relatively small compared to this downward trend, and well within the normal range of historical price fluctuations.

No comments: