NERA report says EPA rules are costly

According to a recent study released by New York-based National Economic Research Associates Inc. (NERA), the Clean Air Transport Rule and the Utility MACT rule could cost power companies an extra $17.8 billion per year. The American Coalition for Clean Coal Electricity, a trade group including coal companies and utilities such as Southern Co. (NYSE: SO) and American Electric Power Co. Inc. (NYSE: AEP), paid for the study.

The NERA report concluded that new costs would lead to a 13 percent drop in coal-fired generation and a 26 percent increase in natural gas generation. Electricity prices would rise by an average of 11.5 percent across the country.

The study also projects that 144,000 power-related jobs would be lost over the next decade, despite claims from supporters that the rules will create construction work. EPA has estimated that the rules would have little impact on jobs, and could actually increase power industry employment in the long run.

Analysts for the Clean Energy Group, a coalition that includes Exelon Corp. (NYSE: EXC) and six other utilities, have released a competing report saying that the costs are manageable and won't make the electric grid less reliable. The Clean Energy Group report says that sixty percent of coal-fired boilers already meet EPA's proposed limit on mercury emissions, while 73 percent would comply with the rules for acid gases and 70 percent would have emissions below the particulate matter standards.

EPA also contradicts the NERA report, claiming that boiler compliance for the Utility MACT rule would cost $10.9 billion and Transport Rule compliance would cost another $2.9 billion per year. But EPA asserts that the monetized health benefits would greatly outweigh the costs – in the hundreds of billions of dollars.

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