Electricity costs are projected to rise between 11 and 24 percent over the next 2 ½ years.  The rate of increase will vary according to where you live.  American Electric Power is one of the largest generators of electric power in the United States.  Taking AEP as an example we find that five of their coal fired generating plants will be unable to meet new EPA standards and will need to be shut down.  Six more generating plants are in jeopardy of the same fate, but might be saved with expenditures of 6 to 8 billion dollars.  In some regions the cost of production will rise by 35% by the end of 2014, according to a statement by AEP.

What the present administration cannot accomplish by legislation it does through regulation.  In 2008 Obama pledged to bankrupt the coal industry with Cap and Trade legislation but was not able to get Cap and Trade through Congress.  That left the job to the Environmental Protection Agency, hence these new proposals.

Here is what the National Economic Research Associates had to say about the new regs.

Using government data for its assumptions, NERA found the rules would increase costs for the electricity sector by more than $184 billion total or about $17.8 billion per year. Average electricity prices would increase by 11.5% and in some areas of the country, the increase could be as high as 23% in states such as Tennessee and Kentucky, according to the study.

The rules would also impact employment, with an estimated loss of 1.4 million job-years by 2020. A job-year is one job for one year, according to [the American Coalition for Clean Coal Electricity].

“The analysis by NERA shows that these would be some of the most expensive EPA rules ever imposed on coal-fueled power plants – costing more than $180 billion, causing double-digit rate electricity rate increases in many states, and leading to substantial job losses nationwide,” ACCCE President and CEO Steve Miller said in a statement Wednesday.

Details about the NERA study are available here.

And that’s not all.  Home heating costs would rise for those who use natural gas to heat their homes.  The NERA estimates the necessary conversion of some generating plants from coal to gas would increase the demand for gas by 26% causing natural gas prices to rise about 17% by the year 2016.

That’s the bad news.  The good news is that the bad news is a proposal.  Proposals are not inevitable.  Congress does have the power to intervene but has shown little inclination to do so.  This is an important issue that needs more attention.


  1. Nice comment, Joey. The Virginia plant was well along into the process before Obama came onto the scene. It couldn’t very well be abandoned. A poor return is better than a total loss.

  2. Wow could the EPA leave companies alone for once. The administration while doing its job correctly is doing the exact opposite of what it promises. Jobs! Closing the plants means more people unemployed. The coal plants are providing reliable electric power sources and electric power to hundreds of people everyday across the country. Coal is our number 1 energy production in the US but we sell most of it to China when it be cheaper to just keep it here and use it ourselves. It costs us less that 5 cents to run a microwave for 1 hour off coal power but we’d rather send the coal to China for the money they offer. It doesn’t make since to close plants when your opening new ones like the surry coal plant in virginia. Anyways great article and sad to see Obama get his way again.

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