Which is in a better position to know what a new federal regulation will cost a company: the company itself, which has to balance its books and meet customers’ needs to stay in business, or federal regulators, who can impose rules without having to be accountable for their economic effects?
Obviously, the company has a greater stake in – and understanding of – its own finances than any regulatory agency possibly could, so it is far more likely to realize the financial consequences of a new regulation.
Recently, an investor-owned utility based in Ohio said that pending emissions regulations by the Environmental Protection Agency would cause a net loss of 600 jobs at its coal-fired power plants and reduce energy production. The regulations would also slap up to $8 billion worth of compliance costs on the utility.
The utility, American Electric Power, said those factors would raise costs to consumers, with painful consequences.
“The sudden increase in electricity rates and impacts on state economies will be significant at a time when people and states are still struggling,” American Electric stated.
Not surprisingly, the head of the EPA denies that American Electric Power and its customers will suffer under the new requirements. EPA Administrator Lisa Jackson referred to objections to the new regulations as “myths.”
But again, it is the utility, and not the EPA, that has to pay the cost of the regulations, so it is in a better position to know just what those costs will be.
We have long been told that supposedly more environmentally friendly “green power” is cost-effective and will create lots of jobs.
But if it really could save utilities money, they would obviously have a strong financial incentive to convert from traditional energy sources to “greener” sources as fast as possible.
Obviously they have not done so because they see the massive costs, which they must then pass along to consumers.
We want energy production that doesn’t release undue levels of objectionable emissions. But we also want to keep the lights on at a price we can afford. All too often, that balance is lost in the quest for more “green power.”