When it comes to predicting the impact of EPA rules, we can’t trust the utility companies

Seven times either I or the SC Small Business Chamber has intervened in rate hearings for SCE&G and Duke Energy.  Seven times the public was told that these power companies had to have every penny of their rate hike proposal or their world would come to an end.  Seven times their rate increases have been cut by about 50% or more by the SC Public Service Commission.  Seven times SCE&G and Duke continued to rack up big earnings after the rate cases were over.

Just last December we settled with SCE&G for a 1.38%  rate hike compared to the 6.6% it asked for.  This month we settled with Duke which had originally asked for a 15.1% overall electric rate increase (14% for small businesses) but in the end was satisfied with a 8.16% overall rate hike (3.42% for small businesses).

This is the background you need to know when utility companies scream that new EPA rules on limiting carbon pollution from coal plants (which account for 40% of our carbon emissions in this country) will cause rates to skyrocket.  The track record shows that you simply can’t believe them. 

Below is a story today in The Hill in which I make this point.

The Hill
September 23, 2013

Emissions regulations are central battle in Obama climate agenda

By Julian Hattem and Ben Goad
If the Obama administration’s proposed limits on greenhouse gas emissions from new power plants become law, they would represent the first major victory for the president on his second-term climate plan. But opponents are not ready to roll over.
The Enivronmental Protection Agency’s (EPA) proposal has reignited a bitter fight over the consequence of the proposed regulations on businesses, with coal country and business groups warning that the announcement will be a death knell for the energy resource and have trickle-down effects throughout the economy.
“The facts are plain and simple: coal provides the greatest share of electricity we use,” said Sen. Joe Manchin, Democrat of West Virginia. “If these regulations go into effect, American jobs will be lost, electricity prices will soar and economic uncertainty will grow.”
Together with an upcoming proposal to cap emissions from power plants already in existence, Friday’s proposal from the EPA amounts to the centerpiece of the White House’s second-term climate agenda and a major effort to control releases of the primary greenhouse gas.
Power plants are the largest source of carbon emissions, accounting for about 40 percent of the nation’s discharges, but currently they are allowed to spew the gas without limit.
The proposal on future facilities sets caps for the amount of the greenhouse gas that new coal and natural gas plants will be able to send into the atmosphere. The draft rules also call for new coal plants, which emit more carbon than natural gas-fired facilities, to use a carbon capture and storage technology that opponents believe is too expensive and still not yet proven to work as planned.
Requiring that technology could amount to a de facto ban on new coal facilities, they have worried, and could hurt small companies disproportionately.
“It is clear that small facilities with sparse capital reserves will be the most impacted by stringent [greenhouse gas] standards,” the conservative American Action Forum concluded in a report issued Friday. “Even though they contribute less than one percent of U.S. emissions, small entities will face the same regulatory hurdles that large utilities encounter.”
Other businesses, however, counter that the realities of climate change present far worse threats to portions of the private sector than do the proposed regulations. Along the coast of South Carolina, businesses fear rising sea levels that could decimate the state’s retail and tourism industries, said Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce.
Knapp rejected claims by industry groups who say the regulations will necessarily raise energy costs for American households.
“The sky is always falling for those guys,” Knapp said. “They simply try to scare the public, and guess what? The next quarter, they’re still making profits – double-digit profits. It’s obscene.”
The White House is comparing its regulatory effort and the opposition it has stirred to Obama’s first-term focus on developing new fuel economy standards for cars and trucks, the second largest source of American carbon emissions.
“We saw a lot of the same naysayers who said that this would be really bad for the auto industry,” Josh Earnest, a White House spokesman, said on Friday. “But over the course of time in which those rules took effect, we have seen the auto industry strengthen significantly in terms of creating jobs and putting forward better products and improving sales and revenue.”
The administration is predicting that requiring the carbon capture technology will lead to new advancements, making it cheaper and easier to employ.
The power plant rules are the administration’s most prominent environmental and safety regulations of Obama’s second term to date, but they are hardly the only ones.
In recent weeks, the administration has issued proposals to certify that the EPA has the authority to regulate streams, estuaries and smaller bodies of water, and to curb cancer-causing dust that can occur at construction sites.
Coming down the pike are final rules limiting pollution from automobiles, upcoming yearly limits for the amount of biofuel that refiners must blend with conventional gasoline and new standards for smog.
Yet time is growing short for the Obama’s second term regulatory agenda, with the clock already ticking on the president’s time in office.
“It’s important to move quickly, both to finish it in this administration and because we need to end the unlimited dumping of carbon pollution from the existing fleet of coal plants, which are the biggest source of carbon pollution in the country,” Dave Hawkins, head of the Natural Resources Defense Council’s climate program, said.
The EPA has laid out a schedule of deadlines meant to ensure its goals are accomplished. Pollution standards for existing plants, for instance, are due to be proposed next June and finalized the following year.
“To do what is on his agenda is definitely within the realm of the practical,” said Abigail Dillen, vice president of litigation for climate and energy for EarthJustice.
Regulators certainly aren’t wasting any time. As it unveiled the proposal on Friday, the EPA announced that it would begin outreach on the second set of rules, for currently operational plants, which are sure to face greater opposition.
“We’re beginning the discussion, and as we go through that discussion lots of ideas will come forward about sensible and cost-effective ways to reduce carbon from the existing fleet,” an EPA official said.
Critics of the power plant initiative worry about the dynamic it will create, especially for other industries. 
“This rule sets a dangerous precedent that EPA will soon extend to other sectors, including refineries,” Rep. Lamar Smith (R-Texas), the chairman of the House Science Committee, said in a statement on Friday. “It is just the latest example of the President’s all-of-the-above rhetoric not matching his administration’s actions.” 
Ross Eisenberg, the vice president of energy and resources policy at the National Association of Manufacturing, shared Smith’s concern about other sources of greenhouse gases that the EPA might decide to regulate. “It’s chemicals, it’s natural gas distribution systems, it’s iron and steel, metal manufacturing, food distribution,” Eisenberg said. “We’re expecting the decisions and the precedent that’s being set here, in terms of what they can and can’t mandate, what data they need to set this rule, to matter for those follow-on regulations.”


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