Policy: Environment & Energy

Energy prices will rise due to coal plant closures, study confirms

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Beltway Confidential,EPA,Ashe Schow,Energy and Environment,Coal,Electricity

What Republicans (and some Democrats) have said would result from coal plant closures due to Environmental Protection Agency regulations - and cheaper natural gas - has been proven in a new study from a prominent research group.

The Brattle Group, which produces complex economic studies meant to hold up in court, found that energy prices would increase $3 to $4 per megawatt-hour for on-peak hours and $1 to $2 per megawatt-hour for off-peak hours.

Further, Brattle found that if gas prices rise in response to reduced coal output, energy prices could rise by as much as $9 to $11 per megawatt hour for on-peak hours and $5 to $6 per megawatt hour for off-peak hours.

“It is likely that reduced supply for electricity generation, increased operating costs, and shifts in fuel demands due to retirement and retrofitting of coal plants will drive up market prices,” the report said.

The report did say that such effects would diminish after five to 10 years once other forms of energy fill the market void.

The study also makes clear that the full cost increase to Americans from plant closures may not even be possible to calculate yet due to uncertainty in the market.

"Some feedback effects may already be partly reflected in forward prices, but likely not with strong certainty, because the environmental policies and market participants' responses are not yet fully known," said Frank Graves, one of the study's authors.

The study puts a dollar amount on President Obama's “war on coal,” which stands to close 207 coal plants in the next decade.

The closures will result in not only skyrocketing electricity rates, as then-candidate Obama promised in 2008 when he was promoting his cap-and-trade plan, but skyrocketing electricity rates at a time when economic insecurity is already plaguing the country.

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