President Barack Obama told the United Nations General Assembly that nobody would get a pass when it comes to climate change. The President was referring to developing nations and the need for them to make emissions cuts, but his words hold true for those here in the U.S. as well. Nobody is going to get a pass from the economic pain felt by the Administration’s climate regulations.
Exelon Senior Vice President Kathleen Barron told the Illinois Commerce Commission rate hikes would be necessary to keep the state’s nuclear plants running to help meet the Environmental Protection Agency’s (EPA) greenhouse gas regulations for existing power plants. Chicago Business reports:
Citing estimates from the U.S. Environmental Protection Agency on how much more nuclear plants should be paid for their output in light of their carbon-free emissions, Ms. Barron told commissioners an increase of about $6 per megawatt-hour would improve the company’s financial picture in Illinois.
There remain questions about ways the state could help Exelon generate more revenue in Illinois, where some of its plants are losing money. But no one disagrees on who would supply the money: ratepayers. A $6-per-megawatt-hour increase in power prices would raise the energy price currently charged by Commonwealth Edison Co. by eight percent. Downstate, where power prices are significantly lower than in the Chicago area, the percentage increase would be significantly more.
The pain felt from the Administration’s climate regulations doesn’t stop at the meter. Higher energy prices will squeeze both production and consumption. Since energy is a critical input for most goods and services, Americans will be hit repeatedly with higher prices as businesses pass higher costs onto consumers. If a company has to absorb the costs, profit margins would shrink and prevent businesses from investing and expanding. Cumulatively, the results will be less income for households, less output from businesses, and longer unemployment lines.
The EPA’s Clean Power Plan requires existing power plants to reduce carbon emissions from 2005 levels by 25 percent by 2020 and by 30 percent by 2030. To attract state buy-in, the agency’s rule has different targets for different states and would allow states flexibility in implementing plans. States will have an opportunity to decide how they will implement the emissions cuts, which would be accomplished in various ways, including closing coal plants, subsidizing carbon-free sources of energy, efficiency mandates, state cap-and-trade plans, and carbon taxes. As indicated by the proposed rate hikes in Illinois, it’s clear that this alleged “flexibility” will merely shift the costs around, not prevent them from happening.
If an 8 percent rate hike sounds like a small price to pay to save the planet from cooking, remember two things: First, the Clean Power Plan is just one part of the Administration’s multifaceted war against affordable energy. Coal is under regulatory attack from all angles, and the accumulation of proposed and newly implemented regulations on new power plants, existing plants, and mining operations will inflict serious economic pain. Second, these regulations will not make any meaningful difference when it comes to climate change.
Rather than figuring out how to pass the pain onto American households, states should be making plans to fight these meaningless regulations.