On the very day that Gaylord Perry intimated his plan for Earth Day the faculty and students of our department sent a telegram committing our participation. A committee was formed headed by a young hydrologist and regional planner from Vanderbilt, Austan Librach. Soon an executive director was hired, a lawyer and city planner Ed Furia. The king of Philidelphia hippies, Ira Einhorn joined the group and played a major role.

In fact, Einhorn was asked to leave several meetings of the organizing committee which he attempted to disrupt. He was not welcome there, nor did he contribute in any material way to the committee’s activitie.

Last week PJM Interconnection, the company that operates the electric grid for 13 states...held its 2015 capacity auction. These are the first real, market prices that take Obama’s most recent anti-coal regulations into account, and they prove that he is keeping his 2008 campaign promise to make electricity prices “necessarily skyrocket.”

The market-clearing price for new 2015 capacity – almost all natural gas – was $136 per megawatt. That’s eight times higher than the price for 2012, which was just $16 per megawatt. [new capacity, not total capacity - B] In the mid-Atlantic area covering New Jersey, Delaware, Pennsylvania, and DC the new price is $167 per megawatt. For the northern Ohio territory served by FirstEnergy, the price is a shocking $357 per megawatt.

Why the massive price increases? Andy Ott from PJM stated the obvious: “Capacity prices were higher than last year's because of retirements of existing coal-fired generation resulting largely from environmental regulations which go into effect in 2015.” Northern Ohio is suffering from more forced coal-plant retirements than the rest of the region, hence the even higher price.

These are not computer models or projections or estimates. These are the actual prices that electric distributors have agreed to pay for new capacity. The costs will be passed on to consumers at the retail level.

House Energy and Power Subcommittee Chairman Ed Whitfield (R-Ky.) aptly explained: “The PJM auction forecasts a dim future where Americans will be paying more to keep the lights on. We are seeing more and more coal plants fall victim to EPA’s destructive regulatory agenda, and as a result, we are seeing more job losses and higher electricity prices.”

The only thing that can stop this massive price hike now is an all-out effort to end Obama’s War on Coal and repeal this destructive regulatory agenda.

The Senate will have a critical opportunity to do just that when it votes on stopping Obama’s most expensive anti-coal regulation sometime in the next couple of weeks. The vote is on the Inhofe Resolution, S.J. Res 37, to overturn the so-called Utility MACT rule, which the EPA itself acknowledges is its most expensive rule ever.

This vote is protected from filibuster, and it will take just 51 votes to send a clear message to Obama that his War on Coal must end.

Of course, Obama could veto the resolution and keep the rule intact, although that would force him to take full political responsibility for the massive impending jump in electricity prices. [but what does he care, those hikes would take place in his lame duck term - B]

Kerpen got it right at the start – the Energy Information Administration has reported a dramatic drop in coal-fired generation in West Virginia – from 44.6 percent last year to nearly 36 percent of generation in this quarter.

Kerpen's story focuses on an announcement from PJM Interconnection, the company that operates the electric grid for Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. The announcement regarded the results of its capacity auction.

---

He goes on to state that northern Ohio will suffer even more.

All of that information is correct. He again rightly points out that they are prices paid by electric distributors for new capacity, not models or projects. The next statement – that "the costs will be passed on to consumers at the retail level" may not be untrue, but does gloss over a quote in the same news release Kerpen mined for the prior Ott quote:

Ott noted that the 2015 capacity prices' overall effect on retail consumers' electricity rates is expected to be moderated by other factors. "Capacity is a fairly small component of the retail price of electricity, and the cost of capacity at the retail level tends to be averaged out over several years," Ott explained. "In addition, if natural gas prices remain low, that would tend to restrain retail electricity prices."

Basically, the cost the consumer pays involves more than simple contract prices paid to generators. While there is a legitimate argument that current conditions discourage burning coal, there is also the problem of cheap and currently abundant shale gas resources competing for the same market share as coal.

While replacing coal with some renewables is not necessarily immediately cost-effective, natural gas plants can currently heavily compete with coal plants. It's also notable that many coal-fired plants were near retirement anyway due to age, inefficiency or both compared to natural gas or modern coal plants.

---

It's not to say recent environmental regulations have not cost the industry – but it remains unclear just how much it will cost consumers. Answering that question involves a number of externalities with answers that vary depending on who you ask.