EPA Air Regulations: 15% Real-Dollar (35% Nominal-Dollar) Increase in Utility Bills by 2020, Study Finds

by Marlo Lewis on November 21, 2014

in Blog

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A new study by Energy Ventures Analysis for Peabody Energy examines the cumulative impacts on electricity and natural gas costs from 2012 to 2020 due to recent and proposed EPA regulations.

Regulations examined include: new national ambient air quality standards (NAAQS) for ozone and particulate matter; the Cross State Air Pollution Rule (CSAPR) to address interstate transport of air pollution; Mercury Air Toxics Standards (MATS) Rule; regional haze regulations; and the Clean Power Plan (CCP), proposed in June 2014, to reduce carbon dioxide (CO2) emissions from state electric power sectors.

The study, Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector, forecasts the following real-dollar (inflation-adjusted) impacts in 2020 compared to 2012:

  • Annual power and gas costs for residential, commercial, and industrial consumers will be $173 billion higher—a 37% increase.
  • Average annual household gas and power bills will increase by $293 or 15%.
  • Residential power bills increase the most in Texas, Mississippi, Pennsylvania, Maryland, and Rhode Island. Families in those states will pay $566 more annually for electricity in 2020 than in 2012.

Because “income growth is being outpaced by inflation for many Americans (the lower earning half of U.S. households experienced a 25% decline in real income from 2001-2014),” the report’s authors believe “it is more appropriate to focus on the results in nominal terms.”

Here are the results presented above in actual (non-inflation-adjusted) dollars:

  • Residential, commercial, and industrial consumers will spend $284 billion or 60% more for power and gas.
  • Average annual household gas and power bills will increase by $680 or 35%.
  • Families in Texas, Mississippi, Pennsylvania, Maryland, and Rhode Island will pay $660 more annually for electricity in 2020 than in 2012.

The report also finds that gas and power costs would “continue to escalate” after 2020 as CPP and other regulatory requirements take effect.

 

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