Coal Regulations Could Hike Energy Costs as Much as 80 Percent

WASHINGTON – Environmental regulations imposed on newly constructed coal-fired power plants could hike the wholesale cost of electricity in some areas by as much as 80 percent, according to a high-ranking Obama administration energy official.

Dr. S. Julio Friedmann, the deputy assistant secretary for clean coal in the Department of Energy, told a House subcommittee last week that those costs are expected to decline once technology advances. But even then the price of electricity will remain higher than current costs.

The precise wholesale hike will vary from plant to plant, depending on factors like the type of coal used and technology implemented.

“Typically we express these costs as a range, so for the first generation technology…we’re looking at something on the order of $70 to $90 a ton,” Friedmann told the House Energy and Commerce Subcommittee on Oversight and Investigations. “In that context that looks something like a 70 to 80 percent increase on the wholesale price of electricity.”

Under second generation technologies currently under development, which aren’t expected to be available until 2022 at the earliest, Friedmann said there exists “a strong expectation that that number will be roughly half – we’ll be looking at something like a 40 or $50 a ton cost.”

The retail price increase will “vary by market,” Friedmann said.

“One of the points that I would like to make though, it is, in fact, a substantial percentage increase in the cost of electricity but in part that is because the current price of coal is so low that it represents a large percentage increase,” he said.

According to the Department of Energy, the cost of a ton of coal as of Feb. 7 ranged from $62.18 for coal from Central Appalachia to $36 from the Uinta Basin in Eastern Utah.

The steep increase is the result of new rules implemented by the Environmental Protection Agency requiring any new power plant coming on line to use carbon capture and sequestration technologies intended to reduce the amount of greenhouse gases dispatched into the atmosphere. Climatologists maintain man-made greenhouse gases are a primary contributor to global climate change.

A number of lawmakers and utility officials assert installing the carbon capture technology in newly constructed power plants can’t be accomplished in a fiscally sustainable manner, meaning power companies will turn to alternative fuel sources like natural gas.

Rep. Tim Murphy (R-Pa.), the subcommittee chairman, said increased electrical costs will make it “even more difficult for families and U.S. manufacturers to compete.”

“The costs to produce electricity have to come down by a large amount to make any successfully demonstrated CCS systems commercially viable in the open market,” Murphy said, adding that “if coal power plants cost too much, nobody will build them.”

The National Energy Technology Laboratory furthermore determined that carbon capture technologies are not ready for implementation on commercial coal-based power plants because they have not been demonstrated at appropriate scale, require about 33 percent of a plant’s steam and power to operate and are cost prohibitive.