EPA Regulations for Utilities an Expensive Exercise in Futility

By Benita M. Dodd

The federal Environmental Protection Agency was in Atlanta on May 26 to hold a daylong hearing – one of just three nationwide – on its proposed Maximum Achievable Control Technology (MACT) regulations for utilities. The passionate – if sometimes misguided – comments came from representatives of utilities, power plant neighbors, Native Americans, environmental activists, grassroots groups and the Georgia Public Policy Foundation.

The Foundation’s comments focused on three aspects of the proposed MACT rules:

  • The cost to industry and consumers in Georgia
  • The time frame, both in the limited opportunity for analysis of the 945 pages of regulations and in the compliance deadline
  • The basis for the EPA’s tougher regulations.

The cost to industry and consumers: The utility MACT is the most immediate threat. The rules would affect power plants responsible for nearly half of the power generation in the nation. EPA says this rule will provide employment for thousands, by supporting 31,000 short-term construction jobs and 9,000 long-term utility jobs. IHS/Global Insight estimates that every $1 billion spent on MACT upgrade and compliance costs will put 16,000 jobs at risk and reduce U.S. Gross Domestic Product by as much as $1.2 billion.

When production costs get higher here, industries will lose their competitive edge and begin to move offshore and more Americans will lose their jobs while the cost of living will get higher. The EPA says it will cost $10.9 billion a year. Industry estimates are much higher; estimates for the utility MACT alone are as high as $100 billion.

Meanwhile, the cost to ratepayers in the Southeast are expected to increase as much as 25 percent. A December 2010 Pew survey found 48 percent of respondents said they had difficulty paying their home heating and electricity costs.

The time frame: The EPA has asked for comments to be submitted by July 5. The regulations include a 171-page proposal, 19 technical support documents and more than 500 pages of regulatory impact analysis. While the EPA is operating under a court-ordered schedule, the judge noted that the consent decree allows for a change of schedule and she was willing to allow EPA more time to “get it right.”

These are some of the most significant and costly rules the EPA has proposed. That enough should motivate the agency to allow ample time for industry experts to analyze the conclusions and to comment on their impact – especially the cost versus the benefits.

The compliance window for these rules will also burden industry. Utilities have three years to comply. They have a legitimate concern about the compressed time schedule, especially given that it applies to the entire industry at once.

The basis for EPA’s tougher regulations, given that the air quality is the best in 40 years; that power plants account for less than a half percent of mercury emissions and that this is a global issue. Regulations exist to cover particulate matter emissions. Since 1970, coal-fired electricity generation increased 57 percent; at the same time, particulate emissions from coal-fired power plants are down 93.1 percent; sulfur emissions are down 56.6 percent and nitrogen oxide emissions are down 38.7 percent.

Utilities have cut emissions of mercury by about 40 percent. Today, the nation’s power plants are responsible for fewer than 50 tons of mercury emissions per year. Chinese power plants alone emit 400 tons. Natural sources produce up to 10,000 tons.

Mercury, cited as the issue of greatest concern, is just not that hazard that it once was. Today, there is certainly no indication that mercury is increasing in Georgia’s environment; it is just the opposite: Mercury in largemouth bass, for example, has dropped by half since the 1960s.

Eighty percent of the advisories against eating fish from U.S. waters are based on mercury, and the number of fishing places with those advisories has increased over 350 percent since the early 1990s. Increasing the number of advisories would lead one to think the danger of mercury pollution is increasing. What’s increasing, however, is the disincentive to eat fish as part of a healthy diet. Mercury emissions overall have decreased 60 percent since 1990 and no documented case of harm from mercury in fish has ever been reported in this country.

Burdensome, costly regulations are no way to encourage competition, investment or job creation. Georgians are struggling to recover from the economic downturn and don’t want intervention in returning to a more secure lifestyle. That includes an affordable cost of living and a thriving job market. Taking money out of Americans’ pockets needlessly to implement air quality regulations that are unnecessary in order to force this country off reliable, affordable and cleaner than ever fossil fuel power generation is no way to a better quality of life.

Benita M. Dodd, vice president of the Georgia Public Policy Foundation, wrote this commentary based on the Foundation’s public comment at the federal Environmental Protection Agency’s Utility MACT hearing in Atlanta on May 26, 2011. The Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (June 3, 2011). Permission to reprint in whole or in part is hereby granted, provided the author and her affiliations are cited.