Scott Segal, director of the Electric Reliability Coordinating Council (ERCC), offered the following statement regarding today's hearing before the House Energy and Commerce Committee's Subcommittee on Energy and Power regarding the costs of EPA's maximum achievable control technology standard on power plants:

"We are glad that the subcommittee is looking into the actual costs associated with EPA's new air rules on power plants.  Affordable and reliable power rates are at the heart of any economic recovery, particularly for over 20 different manufacturing sectors that must have reasonable rates in order to compete internationally.  Last year, Dr. Bernard Weinstein of the Maguire Energy Institute at Southern Methodist University estimated that the type of air rules proposed by EPA could endanger a million manufacturing jobs outside of coal and utility industry losses.  The study is available here:  http://www.ieca-us.com/documents/SMU_Utility_MACT_Report.pdf.  EPA itself admits that the final utility air rule does not differ in any material respect from the proposed rule.

We also want to take the opportunity to place some of the minority witness remarks in context.

Rev. Mitch Hescox, Evangelical Environmental Network

Rev. Hescox's remarks focus on mercury emissions. However, the EPA rule that is the subject of today's hearing goes well beyond mercury.  By adding acid gases to the rule without any appropriate administrative finding, the Agency has created a rule that provides no greater mercury protection but does hurt the most vulnerable in society - the elderly, those living on fixed incomes, those living at or near the poverty level - the most.

People of faith actually involved in the delivery of services to the poor as opposed to political advocacy tend to see things differently than ENN.  For example, Cleveland Catholic Charities Health and Human Services - an organization that assist the poor in meeting their monthly budgets - testified before Senate Environment that the high cost of electricity has a profound impact on the poor. They argued that further regulatory activity could have a "negative impact on millions of people in our country and in [the] state of Ohio."

Additionally, there is no direct relationship between today's action and children's asthma.  EPA has reported that "between 1980 and 2010...total emissions of the six principal air pollutants dropped by 67 percent."  See http://epa.gov/airtrends/aqtrends.html#comparison.  Over this same period - as soot (or particulate matter) emissions have fallen sharply, childhood asthma rates have increased - likely as a result of better-insulated homes or other indoor exposures.  The broader strain on treatment facilities from the rule is evident.  With respect to treatment costs, it is important to note that U.S. hospitals spend $8.5 billion annually on energy, often equaling between one and three percent of a hospital's operating budget. Also, EPA estimates, in the U.S., the health sector is the second most energy-intensive commercial sector. Under Utility MACT and interstate rules, energy costs are estimated to increase 23.5% over the next decade. Hospital administrators will have no choice but to pay attention to the cost of energy as these surging energy costs will squeeze hospital budgets like never before. Without adequate power supply, built upon a foundation of stable and cost-effective coal-fired generation, the healthcare sector and the American public can expect rapidly increasing costs that consumers can ill-afford.  A real threat to the control of asthma symptoms, however, is the availability of lower cost, over the counter epinephrine inhalers, which regulators citing the Clean Air Act will be pulling off the shelves on December 31 - making the cost of addressing asthma symptoms go up by a factor of three.  See http://news.heartland.org/newspaper-article/2011/12/07/banning-epinephrine-inhalers-fda-making-it-harder-breathe

Meanwhile, the total incremental benefit of the rule - even on mercury emissions - is quite small.  For a rule that costs 10 billion dollars, mercury reductions will create benefits worth as little as 200 times less according to EPA's own analysis.  Indeed, when the unemployment impacts are figured in, it is highly likely that the rule has a net negative impact on human health.

Josh Bivens, Economic Policy Institute

Bivens argues that the rule with have a positive effect on employment.  To say the least, and as demonstrated today, his is truly a minority opinion.  No objective economist believes it is possible to regulate our way to prosperity.

Here are the facts.  Utility MACT will undermine job creation in the United States in several different ways.  It will result in retirement of a significant number of power plants and either fail to replace that capacity or replace it with less labor-intensive forms of generation.  It will increase the cost of power, undermining the international competitiveness of almost two dozen manufacturing industries, and it will reduce employment upstream in the mining sectors.  All told, it is anticipated that the rule will result in the loss of some 1.44 million jobs by 2020.  While some jobs are created by complying with the new rule, the number and quality of those jobs is far less than those destroyed.  We estimate that for every one temporary job created, four higher-paying permanent jobs are lost.  The bottom line:  this rule is the most expensive air rule that EPA has ever proposed in terms of direct costs.  It is certainly the most extensive intervention into the power market and job market that EPA has ever attempted to implement.

Benefits decidedly do not outweigh costs.  Most of the benefits EPA claims to the rule come from reducing soot emissions.  But EPA also is on the record saying that most of these soot benefits come in areas already achieving the Agency's prescribed standards for soot.  EPA has said that soot emissions in those areas are already so low that they pose no threat to human health and the environment, even for very susceptible populations.  Therefore, the rule is expected to have almost NO incremental health benefits over and above what current law is achieving.  Recently, former OMB official and current George Washington University expert on regulatory affairs Susan Dudley wrote that the rule likely has no real benefit and is so costly that it will actually undermine public health.  See http://thehill.com/blogs/congress-blog/energy-a-environment/200539-epas-risks-outweigh-rewards-for-new-mercury-rule

Thanks, and please let us know if you have further questions."