How to manage compliance costs and distribute economic benefits

BY ANDREA OKIE, PAUL HIBBARD & SUSAN TIERNEY, Analysis Group

In early June 2014, the U.S. Environmental Protection Agency (EPA) released proposed rules in Cutting CO2 emissions from existing fossil power plants. EPA’s Clean Power Plan would require significant reductions in CO2 (carbon dioxide) emissions from the power sector, while also providing each state the flexibility to determine its preferred way to comply with the new requirements.

In comments filed with the EPA, some observers have contended that consumers will experience net costs because, in their view, overall compliance costs will outweigh economic and other benefits. EPA’s analysis indicates that customers will experience slightly higher electricity rates in the near term but lower electricity bills over the long run with the Clean Power Plan in place.