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Official: Power plant plan could spike electricity prices

By: Denise Allabaugh |

President Barack Obama’s plan to reduce carbon emissions from power plants could increase electricity prices for consumers, according to a top official with a global business advisory firm.

Michael Catanzaro, managing director of energy and natural resources practice with FTI Consulting, was one of seven who spoke at a public hearing Thursday at Wilkes University about the Clean Power Plan proposal that the U.S. Environmental Protection Agency released under the president’s direction.

State Sen. John Yudichak, Sen. Gene Yaw and members of the Senate Environmental Resources and Energy Committee hosted the hearing to listen to testimony about the reductions in carbon emissions scheduled to begin in 2020.

The new rule is the subject of much debate.

Catanzaro said under the plan, plants would be faced with increased costs and decreased revenues which could result in higher electricity costs for consumers with no material reductions in carbon emissions.

The plan would threaten the financial viability of coal-dominated power plants, such as one in Homer City which offers good-paying jobs, he said.

Coal-fired power plants across the country would face the dire prospect of bankruptcy and retirement, threatening to disrupt communities that rely on those plants, he said.

Jack Smeltz, president of the Electric Power Generation Association, a Pennsylvania-based trade association which represents electric generating companies, said the emission goals appear to be very aggressive and may not be achievable.

“We are concerned about what could happen to the bulk power system as a whole when you force so many changes so quickly,” Smeltz said. “You can’t make something more efficient that can’t be made more efficient or can’t afford to make itself more efficient.”

Smeltz was joined by Dennis Murphy, vice president and chief operating officer of PPL Generation’s Eastern Fossil and Hydro Division, who said regulation increases the cost of electricity and mitigates the effects of higher electricity prices.

“Our primary concern with the proposed regulation is the very aggressive reduction required of Pennsylvania,” Murphy said.

Murphy oversees the operations of PPL’s fossil and hydro generation fleet in Pennsylvania and also spoke on behalf of PPL Energy Supply, whose assets include the PPL nuclear power plant in Salem Township.

PPL has little capability to economically improve the efficiency of its fossil plants, he said.

“Over the past decade or so, PPL has already implemented realistically achievable efficiency improvements at its coal-fired power plants,” Murphy said. “We made those investment decisions at a time when both energy and capacity prices were much higher than today.”

Christina Simeone, director of the PennFuture Energy Center, said the EPA is required by law to reduce the carbon pollution causing climate change and harming public health, and power plants are the number one source of the emissions.

She and Jackson Morris, director of Eastern Energy at the Natural Resources Defense Council, both spoke in favor of the proposed Clean Power Plan. Morris presented statistics showing the proposed guidelines can create more than 51,000 new jobs in Pennsylvania, contribute $456 million in energy savings to Pennsylvania families and businesses and significantly cut pollution in ways to help prevent thousands of asthma attacks, heart attacks, lung cancer diagnoses and other illnesses.

According to the EPA, the new rule will result in $93 billion in public health and climate benefits, 150,000 fewer asthma attacks each year and 6,600 fewer premature deaths each year.

Smeltz, however, presented statistics from the U.S. Chamber of Commerce showing the new rule could cost as many as 442,000 jobs in 2022 and put an average of 224,000 Americans out of work annually, increase electricity costs by more than $289 billion and lower disposable household income by $586 billion.