EPA’s Utility MACT: Myths and Facts

Using the Congressional Review Act (CRA), the U.S. Senate has an up-coming vote in early June to overturn the EPA’s costly Utility MACT Rule.  The Obama administration’s EPA along with other environmental NGOs have been publishing false and misleading propaganda to generate support for the Utility MACT rule, the most expensive rule ever issued by the EPA.  

The EPA claims the Utility MACT is necessary in order to protect the public’s health from mercury and air toxics.  Yet the facts do not support the EPA’s sense of urgency on the issue; the benefits that they project in their analysis are vastly overstated and deceptive.  The Regulatory Impact Analysis (RIA) the EPA conducted to assess the rule’s impact found that over 99 percent of the benefits they promote from the rule are actually a result of decreased particulate matter (PM) emissions, not a reduction of air toxics such as mercury.  PM emissions are completely different from mercury and other toxics, and they are already subject to their own regulations.  

The EPA suggests that the health benefits from the Utility MACT rule will far exceed any cost incurred, but it’s only another myth fashioned by the EPA that relies on double counting the benefits in PM reductions.  In reality, the estimated benefits by the EPA are only between $500,000 and $6million in relation to mercury, and they were unable to come up with any quantifiable value for the benefits the regulation would provide on the other air toxics. Those $500,000 to $6million in benefits—which many have challenged—may sound good at first, but when you compare these benefits to the $10 billion dollar annual cost of the Utility MACT rule, the results are far from spectacular.  

The final myth the EPA is using to promote their war on American energy is that the requirements created by the Utility MACT are achievable by the power plants.  Power companies and vendors of their equipment both have stated that the new mandates are so rigorous that no new coal-fired power plants will be built in the U.S.  The EPA relied on data for the standards from theoretical plants, not a “real-world” when designing the new standards, and there is a large gap between theory and reality.    

Coal-fired power plants are facing closure possibilities, which will lead to job loss and other economic harm. The EPA blames potential shut-downs on their inability to compete with natural gas prices and other economic factors, not the costs of the Utility MACT.  The truth is that power plants are already closing as a result of the Utility MACT as stated by owners and operators of these plants.  EPA’s model of CSAPR and Utility MACT projected the retirement of 9,500 MW of coal by 2015, but the owners claim this number is closer to 24,000 MW of retiring coal.  The National Economic Research Associates found that the rule would cost an estimated 180,000 to 215,000 jobs by the year 2015.  Combined with other EPA regulations, the economy has the potential to lose 1.65 million jobs by the end of 2020.  While the Utility MACT claims to create jobs, these are limited to construction jobs.  Avon Lake, Ohio, is an ideal example of the unemployment that will result from the new Utility MACT.  A local GlenOn power plant closed as a result of EPA regulations, which will cost the school system 11 percent of their annual budget and, 80 high-quality jobs that were lost at the plant and countless more in the community as an indirect cost.  

Not only are Americans going to face unemployment as a result of the Utility MACT, but their electric bills will begin to increase as well.  It has been projected that the rule will cost ratepayers close to $21 billion annually, an average increase of 6.5 percent. Some areas that are heavily dependent on coal-fired electricity generation could face a 19 percent surge in cost.  These price escalations are already being felt; PJM, which supplies power for 60 million homes in the mid-Atlantic and Midwest reported a two-year capacity price increase of 390 percent, mainly accredited to the cost to comply with environmental codes.  Bills throughout the PJM region could rise by $130—and this is not factoring in any changes to the cost of generation, which are likely.  

The Utility MACT is regressive, which hits vulnerable low-income groups the hardest.  For example, in 2012 those with an annual income of $50,000 or less will pay roughly 21 percent of after-tax income on energy; whereas those making over $50,000 will only pay 9 percent on energy.  A disproportional tax rate hurts the poor and those on fixed incomes.   

Can anything be done in order to stop the Utility MACT?  Yes! We need to support S.J Res. 37 introduced by Sen. Jim Inhofe.  This is a resolution of disapproval under the Congressional Review Act, which allows the resolution to bypass the procedural hurdles and pass the Senate with a simple majority.  Call your Senators and ask them to support S.J Res. 37.  It’s the only chance to repeal and replace a rule that will kill American jobs.