Air Rules to Cost Almost $18 Billion a Year, Coal Group Says

Clean-air rules proposed by the Obama administration will cost utilities $17.8 billion annually and raise electricity rates 11.5 percent on average in 2016, according to an analysis paid for by a coal-industry group.

The report, released today as part of a campaign to delay compliance deadlines in the pending rules, estimates that regulations cutting emissions of mercury, sulfur dioxide and nitrogen oxides would lead to the “premature” retirements of coal-fired power plants that can generate 47.8 gigawatts of electricity, about 15 percent of coal’s U.S. production capacity.

The American Coalition for Clean Coal Electricity, an Alexandria, Virginia-based group whose members include Southern Co. (SO) of Atlanta and St. Louis-based Peabody Energy Corp. (BTU), paid National Economic Research Associates Inc. for the study.

The analysis by the New York-based company shows the pollution limits would be “some of the most expensive EPA rules ever imposed on coal-fueled power plants,” Steve Miller, chief executive of the coal group, said in an e-mail.

The agency is working with utilities and interested parties to ensure its rules are “reasonable, common-sense and achievable,” Brendan Gilfillan, a spokesman for the EPA, said in an e-mail.

More than half of all coal-fired power plants use “widely available pollution control technologies” that can meet the new mercury and air toxics emission targets, he said.

Whitfield Measure

Representative Ed Whitfield, a Kentucky Republican and chairman of the energy subcommittee of the House Energy and Commerce Committee, has said he plans to introduce a bill to give utilities more time to comply with the rules.

New maximum levels for nitrogen oxides, a component of smog, and sulfur dioxide, which causes acid rain, are scheduled to take effect in 2012. The EPA is under a court order to produce a final mercury rule in November. Utilities would have as long as four years to meet the mercury standard.

The agency says its mercury rule, which also covers acid gases and arsenic emissions, would prevent as many as 17,000 premature deaths and 11,000 heart attacks a year, at an annual cost to industry of $10.9 billion in 2016.

Exposure to mercury can lead to developmental problems in children. Sulfur dioxide and nitrogen oxides can lead to respiratory illnesses.

-- Editors: Steve Geimann, Judy Pasternak

To contact the reporters on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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