New Report Assigns Dollar Values to Recent EPA Regulations

Ever since the U.S. Environmental Protection Agency (EPA) released its Clean Power Plan proposal this past June, a number of analyses have been conducted to try and determine the total cost of the regulation to electricity consumers. A report released this morning by Energy Ventures Analysis (EVA), however, goes a step further.

In addition to the Clean Power Plan, EPA has recently finalized, proposed, or will soon propose a slew of environmental regulations affecting the electric power sector. These include new National Ambient Air Quality Standards (NAAQS) for ozone and particulate matter, the Cross State Air Pollution Rule (CSAPR) to address interstate transport of air pollution, Mercury and Air Toxic Standards (MATS), and regional haze regulations intended to reduce regional haze and improve visibility in national parks.

These regulations have a cumulative effect of imposing considerable financial burdens on the electric power sector and, ultimately, consumers. Similarly, natural gas prices can also be expected to rise as a result of the increased demand created by the Clean Power Plan. Precisely how much electricity and gas prices will increase is exactly what EVA sought to determine.

All told, EVA expects that by 2020 the aforementioned regulations will increase residential electricity and natural gas costs by 27 and 50 percent, respectively. In 2020, the average family in the U.S. can expect to pay $680 more for electricity and gas annually from a 2012 baseline.

This, of course, does not tell the entire story. A significant amount (47 percent according to the American Enterprise Institute) of energy used in the U.S. is consumed indirectly and comes embedded in the prices of goods and services. In other words, as energy costs—and specifically electricity rates—spike, the price of everything we consume will also rise. By 2020, EVA expects the price of industrial power to increase by 56 percent from 2012 levels. Such an increase would inevitably have a sizable impact on individuals and families.

The five states expected to bear the greatest financial burden as a result of EPA’s recent regulations are Texas, Mississippi, Pennsylvania, Maryland and Rhode Island. Collectively, families in these five states will see average electricity increases of more than $566 in real terms.

EVA’s report is more evidence that if left unchecked by Congress, the States, and other stakeholders, EPA will impose very real financial burdens on individuals and families at a time in which income growth is being outpaced by inflation for many Americans.