Commentary: On climate policy, a consumer focus is needed

While the President may be reacting to years of congressional inaction on climate-related issues since the failure of cap-and-trade legislation in 2009, the Administration and Congress must thoroughly consider the impacts that regulating or legislating carbon emissions will have on energy consumers. With coal producing over 40% of our nation’s electricity, limiting its potential will present a significant set of challenges that need to be carefully analyzed before we move forward with anything as ambitious as the President has outlined.

Although the President’s Climate Action Plan does include some positive measures – including accelerated development of renewable electricity on federal lands and support for small modular nuclear reactor, the biggest concern for consumers undoubtedly focuses on the forthcoming EPA carbon limitations on existing and new power plants.

What’s so worrisome about these potential EPA regulations? For electricity consumers, the rules will undoubtedly lead to an uncertain future for coal, but clear ramifications for consumers: less fuel diversity and higher electricity costs. EPA’s actions could have the potential to shutter hundreds of coal-fired power plants across the nation, requiring utilities to switch generation fuel and invest billions in upgrades and new facilities. All this translates to higher costs for ratepayers.

Depending on how the eventual rule is written, some states and regions may experience more dramatic consequences than others. For example, the Midwest – particularly Michigan, Wisconsin, Indiana, and Minnesota where well over half of electricity is generated by coal, could face dramatic increases in electricity costs. Significant costs in the increase of energy will affect every sector of the economy, particularly the region’s manufacturers. With energy remaining one of top expenses for manufacturers, unnecessarily raising costs will put U.S. manufacturers at a significant disadvantage. Ironically, this proposed policy comes at a time when manufacturing is returning from overseas, thanks to a surge in domestic natural gas production and the lower energy prices that have resulted.

Consumers, environmentalists and industry all understand the magnitude of these regulations on our nation’s energy future. When EPA issued a draft rule in April, the agency received over 2 million comments on the rule. Heightened public concern clearly illustrates that this process must proceed in a transparent, citizen-driven fashion. As such, Congress must absolutely take an active role in order to prevent negative ramifications for our nation’s electricity consumers.