Tom Borelli

President Obama’s glaring ignorance of the economic consequences of his energy policy will doom a central theme in his State of the Union speech: his “Blueprint for an America Built to Last” plan to boost manufacturing jobs.

Obama revealed in his speech that his command-and-control energy policy will now emphasize the use of natural gas to compliment his renewable energy push to generate electricity. Notably absent from Obama’s “all of the above” energy strategy is coal, which currently provides about 45 percent of our nation’s electricity.

In classic Obama heavy-handed style, the President is using the regulatory power of the EPA to manipulate the free market to favor natural gas and renewable energy by regulating coal-fired electricity out of existence.

Obama’s blunder is ignoring the transition cost of eliminating about half of the country’s cheap and dependable source of electricity. Higher energy costs resulting from the shift from coal to Obama’s choice of electricity generation will drain the disposable income of consumers and, most important, be a huge barrier to the creation of new manufacturing jobs.

The EPA’s war against coal is already making electricity prices skyrocket. The compliance costs associated with the agency’s Cross State Air Pollution and Utility MACT rules are forcing coal-fired utilities to close and electricity prices to rise across the country.

Ohio-based utility First Energy, for example, recently announced it was going close six coal-fired power plants due to the costs associated with EPA regulations. The reduction in the supply of power is expected to almost double electricity prices.

An UBS stock analyst estimated the rates for power would rise to $200 per megawatt per day from $126. An analyst from a different firm predicted rates could go as high as $500.

American Electric Power (AEP), another Ohio-based utility with a heavy reliance on coal, was given permission from the Public Utility Commission of Ohio (PUC) to recover the costs of complying with the EPA’s rules, including transitioning its facilities from coal to natural gas. The plan also allows AEP to recover investments is solar power.

The price tag of the new compliance plan is estimated to be $6 to $8 billion. While the deal is good for AEP, the same can’t be said of the hardworking families and businesses that will be forced to pay for Obama’s energy policy.

With coal-fired utilities already on the regulatory ropes, the EPA is setting them up for a knockout punch. According to news reports, the agency is close to releasing a new regulation targeting greenhouse gas emissions for the utility sector.


Tom Borelli

Tom Borelli, Ph.D., is a Senior Fellow with FreedomWorks.

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