Just like Ohio’s state renewable energy mandate, federal power plant emission regulations drive up electricity costs and risk reliability by directly interfering with the state energy market. The coal plants that are being closed generally cost somewhat more to operate than newer, more efficient plants. However, the older coal plants have recovered or nearly recovered their “capital costs,” or the costs to build the plant. Since power plants are expensive to build, it is actually more economically efficient to continue running the older plant that is already paid for than it is to build a whole new plant that is more energy efficient.

This situation is as if a new law forced you to sell your house, which you had recently paid off, in order to build a new house that had better insulation. Although the new house with better insulation would save money on your energy bills every year, the new mortgage cost would vastly outweigh this relatively small benefit. Similarly, these power plant regulations force power companies to forego the most economically efficient option in favor of more energy efficient options, in turn forcing power companies to raise prices for consumers and businesses.

So instead of producing power with the most reliable and lowest-cost sources, AEP and other generators are forced to consider less reliable and more expensive alternatives. To compensate for the loss in coal-fired generation, AEP has stated that it will begin looking into utility-owned solar to meet power needs. This statement demonstrates that government regulations pick winners and losers by creating an uneven playing field in what should be a competitive market. If solar power is an economically efficient endeavor for AEP and its customers, the company will provide solar without the forceful hand of the EPA guiding its decisions.

EPA is not relenting after the MATS rule, but adding the “Clean Power Plan” that regulates power plants’ carbon dioxide emissions. The carbon rule is projected to force an additional 90,000 MW of coal power to go offline, in addition to the nearly 61,000 MW forced to retire due to MATS. An economic analysis found that the Clean Power Plan could cost up to $348 billion from 2017-2031 (present value, inflation-adjusted 2013 dollars). Ohioans could see double-digit electricity price increases, which would hurt low and fixed income citizens the most.

The Washington bureaucracy is able to force coal plants to close prematurely by picking winners and losers in Ohio’s energy market. These regulations put jobs and grid reliability at risk and drive up electricity prices. Fortunately, some members of Congress are trying to help states push back against federal overreach. One example is Senator Rob Portman’s proposal to allow governors to opt-out of compliance if doing so would “increase retail electricity prices, threaten electricity reliability, or have a negative impact on the state’s economy.” Ohio is the 6th-largest consumer of energy in the United States, so such a measure is necessary to keep our state’s economy from running out of steam.