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Economic Analysis of Clean Power Plan Shows High Cost, Minimal Benefits

December 2, 2015
By Staff NERA Economic Consulting

NERA Economic Consulting has produced an analysis of the Clean Power Plan (CPP) recently finalized by the Obama Administration, aimed at reducing carbon dioxide emissions from new and existing power plants by 32 percent nationwide.

NERA Economic Consulting has produced an analysis of the Clean Power Plan (CPP) recently finalized by the Obama Administration, aimed at reducing carbon dioxide emissions from new and existing power plants by 32 percent nationwide. NERA's calculates the CPP could add $29 billion to $39 billion in costs to utilities or as much as $292 billion in added costs between 2022 and 2033, exclusive of added transmission, distribution and naturalgas infrastructure costs. 

As a result of these added costs, consumers in 40 states could see double-digit electricity price increases, and 28 states could face electricity price spikes greater than 20 percent. Accross the nation, electric power consumers will likely see their average annual U.S. retail electricity rate increase rise between 11% per year to to 14% per year between 2022 and 2033, above what it would have been absent the CPP. NERA projects people in the 10 states hardest hit by the CPP could see their energy prices rise by 30 percent or more.

According to the NERA analysis, rising energy costs will result in net loss in U.S. household spending power, meaning an overall loss to the economy, of up to $79 billion in net present value by 2033.

Plan a ‘Wake-Up Call’

Commenting on the findings of the study, Mike Duncan, president and CEO of the American Coalition for Clean Coal Electricity, which requested the study, said in a statement, “This analysis makes it abundantly clear the president’s power plan will result in higher electricity prices and delivers a sharp wake-up call to states and consumers.” 

“Common sense tells us that with 27 states seeking judicial action to stop this plan from being implemented there is reason enough for EPA to take this rule off the table," said Duncan. "Sadly, however, common sense isn’t prevailing and as result Americans’ economic well-being and livelihoods are at risk.”

Despite the high costs, while the CPP will result in a decline in domestic carbon dioixde emissions, its impact on temperature rise will be negligible. The annual minimum estimated cost of nearly $30 billion per year for the plan is three times greater than the cost of EPA’s Mercury and Air Toxics rule, the U.S. Supreme Court recently struck down saying, “It is not rational … to impose billions of dollars in economic costs in return for a few dollars in … benefits. 

“Energy policy needs to ensure all Americans have affordable and reliable electricity to meet everyday challenges and to help build a strong foundation of economic success. Regardless of where you stand politically, this plan fails to meet that threshold,” Duncan said. 

H. Sterling Burnett, Ph.D., (hsburnett@heartland.org) is the managing editor of Environment & Climate News.

INTERNET INFO

NERA Economic Consulting, “Energy and Consumer Impacts of EPA’s Clean Power Plan,” November 7, 2015; https://www.heartland.org/policy-documents/energy-and-consumer-impacts-epas-clean-power-plan

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