Inside the Beltway: EPA Mercury Rules Have Small CA Effect

By Published On: January 6, 2012

Federal rules to limit mercury emissions from coal power plants would only slightly raise the price of power in California due to the state’s phase-out of utility coal generation contracts. The rules were put on hold by a federal judge Dec. 31, 2011. California would see the average retail price of power go up 1.3 percent to 13.2 cents/kWh in 2015 under the U.S. Environmental Protection Agency’s Clean Air Act rules--instead of 13 cents/kWh without the rules. Rates would then drop to 12.7 cents/kWh by 2030 as new, more efficient, generation plants come online, according to an EPA analysis. EPA released the cost study when it promulgated the final emissions regulations on Dec. 21, 2011. In California, Calpine chief executive officer Jack Fusco called the emissions requirements “reasonable,” stating the power industry “is well positioned to comply with the limits while maintaining the reliability of the electric system.” EPA’s mercury and air toxics standards affect both coal- and oil-fired power plants, including some in California. The standards limit emissions of mercury and other toxics like arsenic, acid gas, nickel, selenium, and cyanide. EPA’s cost-benefit analysis shows the state would see up to $120 million in health benefits by 2016 due to emissions reductions. The rules would cover 14 power plants in California, according to EPA, including the coal-fired Coolwater plant in Dagget and scattered plants with oil-fired capabilities, such as the BP Wilmington cogeneration plant. Rep. Henry Waxman (D-CA) stated the rules were “long overdue.” Republican lawmakers representing other states lauded the stay on enforcement at the end of last year by the U.S. Court of Appeals for the District of Columbia Circuit. House Energy & Commerce Committee chair, Rep. Fred Upton (R-MI), stated the rules would “increase electricity rates, threaten electric reliability, and unfairly penalize electricity generated from coal.” EPA’s analysis shows that electricity rates in the lower Great Plains region, for instance, would increase 6.3 percent by 2015. In response to the court’s stay, EPA stated “it firmly believes that when the court does weigh the merits of the rule it will ultimately be upheld.” The stay stemmed from a court challenge against the requirements by Texas and other states that are home to coal-fired power plants.

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