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EPA Issues Final Response to Supreme Court Over Mercury Emissions Rule

The Environmental Protection Agency (EPA) on Friday reaffirmed in a supplemental filing that the benefits of its limits on mercury emissions from U.S. power plants outweigh the costs.

The filing represents the EPA’s completed response to a U.S. Supreme Court ruling last summer that the regulatory agency had erred by not adequately considering the costs to industry when it promulgated its Mercury and Air Toxics Standard (MATS) rule (see Daily GPI, June 29, 2015).

The high court’s decision required the EPA to go back and conduct a cost-benefit analysis of the MATS rule, but the regulation was allowed to remain in effect (see Daily GPI, Dec. 15, 2015).

By the time the Supreme Court ruled against EPA last summer, utilities had already begun complying with MATS, contributing to the retirement of a number of older coal-fired power plants and helping clear the path for cheap, cleaner-burning natural gas to surge as a fuel for electric generation (see Daily GPI, Dec. 28, 2015; Dec. 2, 2015; Oct. 28, 2015).

EIA recently said that 80% of the capacity retirements in 2015 were coal plants (see Daily GPI, March 8).

EPA said it looked at compliance costs for MATS based on four different metrics: revenues, capital expenditures (capex), retail electricity rates and the potential impact on grid reliability. The agency said it found that the projected annual cost of compliance would be between 2.7% and 3.5% of annual electricity sales from 2000 to 2011, while the capital cost of compliance would be between 3% and 5.9% of total annual power sector capex over a 10-year period.

Reliability would not be impacted by the rule, EPA said, while retail electricity prices would increase by about 3.1% above the national average, or 0.3 cents/kWh.

EPA said it also conducted an “extensive cost-benefit analysis” at the time the MATS final rule was issued in 2012. That analysis found that “for every dollar spent to reduce toxic pollution from power plants, the American public would see up to $9 in health benefits.”

“The final supplemental finding does not affect power plants’ compliance obligations, which began in April 2015, or the steps that many plants across the country have already taken and are continuing to take to meet those obligations,” EPA said, adding that it “has continued to work closely with the power sector, grid operators, utilities, the Department of Energy and the Federal Energy Regulatory Commission throughout the compliance period to ensure that the power sector can continue to provide reliable electricity to consumers at a reasonable cost.”

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