New U.S. EPA rules will crush Ohio recovery

Joe Nichols Jan 26, 2015

The U.S. EPA recently proposed two crushing sets of regulations—the Clean Power Plan aims to reduce CO2 emissions, while the other is a plan for ozone reduction. There are four major issues with these plans that should concern all Ohioans: (1) the costs imposed are extraordinary and will damage the economy; (2) compliance will make Ohio’s energy grid less reliable; (3) the centralization of power to the EPA will erode the free market forces which have slowed the growth of energy costs and improved services; and (4) the federal agency’s power grab will strip much of Ohio’s authority to make her own energy policy.

First, studies by NERA Economic Consulting found that the Clean Power Plan and the ozone proposal would cost the nation up to $73 billion and $360 billion per year, respectively. The worst-case scenario has the total cost of these two regulations nearly equaling the 2014 federal deficit of $486 billion.

In the Buckeye State specifically, NERA estimates the ozone regulations alone could impose compliance costs of more than $20.8 billion per year. Both regulations will also increase electricity costs—the Clean Power Plan by an average of 12 percent per year by 2031 after adjusting for inflation, and ozone regulations by about 15 percent through 2040.

Second, these regulations would impair electric reliability by reducing the use of coal to generate electricity. Less coal usage forces our state to rely more on natural gas, for which there is insufficient pipeline infrastructure, and renewables such as solar and wind, which are inherently unstable. This increases the likelihood of “widespread rotating blackouts,” according to Commissioner Philip Moeller of the Federal Energy Regulatory Commission, and could be catastrophic during severe weather events like the recent polar vortex.

Third, centralizing command over Ohio’s energy sector under the U.S. EPA also diminishes market freedom and consumer choice. The ability of most Ohio consumers to choose the best electricity provider among a variety of competitors would be restricted, leading to worse service at higher prices.

Finally, as the Buckeye Institute’s comments to the EPA explain, the Clean Power Plan is fundamentally a “national energy and resource planning policy.” It gives the EPA unprecedented authority over rightful state jurisdiction, and Ohio officials would often need permission from the EPA to change the state’s energy policies.

Ohio citizens have power to hold their state legislators accountable through the democratic process; however, they cannot hold bureaucrats at the EPA accountable for wrongheaded policies. Thus, the Clean Power Plan would severely curtail Ohioans’ political power over their own energy system.

Piling on $20.8 billion per year in regulatory costs is an economic growth killer that will also endanger the reliability of Ohio’s power grid. Worse, the rules leave Ohio vulnerable to future changes because increased EPA power strips Ohioans of control over their own energy system. These plans ignore economic prudence and disregard federalist principles. For these reasons the Ohio General Assembly should do everything in its power to mitigate both proposals.