Westmoreland Details Impact Of Regulatory Changes On Job Creation

Today’s Courier Herald Column:

Two weeks ago I wrote that Republicans were doing a horrible job communicating what their current enemy of job creation, regulation, means to the average voter, and made a few suggestions to help transform an overused and nebulous buzzword into an issue that is better understood by voters. Just after I submitted the column to publish, I received an email from the office of Congressman Lynn Westmoreland announcing a weekly “Regulatory Roundup”, an effort to highlight specific regulations and explain how they are harmful to job creation and the economy. I’ll attribute the timing to coincidence much more than clairvoyance on my part.

In his initial report, Westmoreland cited a report from the U.S. Small Business Administration that calculated the regulatory burden for companies with 20 or fewer employees as a cost of $10,585 per employee. That cost is growing. A Heritage Foundation report claims that there were 43 major new regulations imposed on businesses in 2010 alone, with a total cost of $26.5 Billion.

This Week, Westmoreland has targeted the EPA and their additional regulations affecting power generation. Georgia Power has already announced that it will de-commission 3 coal burning power plants over the next few year because the cost of upgrading these facilities to comply with new regulations will be too great. The company anticipates having to buy additional power generation capacity from plants in other states, at a higher cost, which will be passed on to Georgia consumers.

Westmoreland cites two new EPA rules which significantly change the power generation industry, noting that each rule change was drafted and implemented “without a single action by Congress.” They are the Utility Maximum Achievable Control Technology (MACT) rule, and the Cross-State Air Pollution rule. The two combined are estimated to cost $17.8 Billion annually when implemented.

The MACT Rule adds additional restrictions on the amount of mercury, acid gases, and non-mercury metals that power plants can release into the air during power generation. The EPA estimates the cost to implement at $10.9 Billion per year for power companies. Westmoreland claims it to be the one of the most costly regulation changes in the history of the EPA, noting that the cost estimate does not take into account additional consumer costs and other related expenses. He cites other studies which put the real cost closer to $100 Billion annually.

The CSAPR places a cap on the amount of total emissions from states in the Eastern U.S. to assist “downwind states” in meeting federal ozone standards. 27 states will be forced to make “dramatic” reductions in power plant emissions, according to the Congressman, despite a 56% reduction in sulfur emissions since 1980 and a 77 percent reduction in nitrogen oxide emissions since 1990. A “Cap and Trade” proposal to limit carbon emissions went nowhere even under a Democratic Congress. Yet through an administrative regulatory decree, the EPA has demanded changes that would cost as much as $100 Million per power plant to be implemented. As noted above, Georgia Power has decided it must close three of its largest plants rather than make this investment. If other companies in neighboring states make similar decisions, however, that power that they expect to purchase in order fill the void could be dramatically more expensive than current prices, if it is available at all.

In response to the above issues, the House of Representatives is expected to pass the Transparence In Regulatory Analysis of Impacts on the Nation (TRAIN) Act. TRAIN would require that EPA report to Congress on all direct and indirect impacts of new regulations prior to implementation. Westmoreland admits that the rule will be shelved immediately upon its arrival in the Senate, however. Partisan gridlock doesn’t apply just to budget matters, after all.

If you would like to follow Congressman Westmoreland’s full series on regulation, you can check out his website at www.house.gov/Westmoreland.

12 comments

  1. Three Jack says:

    glad to see this report from the congressman showing how out of control agencies create more problems than they could ever hope to solve.

    i guess i need to read up on the epa because it is beyond my comprehension how an executive branch agency is able to subvert the constitution to impose it’s ‘green’ will on private businesses. seems to me congress should be suing the administration to halt any more regulations without first going through proper legislative channels.

    • saltycracker says:

      It is not just the Feds or the administration, local PUC’s & the public fight the utilities over issues that have unintended consequences resulting in the higher rates they abhor.

      Not to say there aren’t Cobb EMC’s out there but electricity gets the attention when water utilities need a lot more oversight.

  2. ZazaPachulia says:

    I don’t quite understand this stuff either… But thanks for sharing this, Charlie.

    This is more a directed to Westmoreland’s staff that sent out the message, but focusing regulation gripes on woes potentially affecting a state regulated public utility is not the most lucid place to begin the argument. Georgia Power, how it operates and how it is affected by regulation is a lot more difficult to understand than, say, how specific types of regulation adversely affect specific small businesses and their ability to hire and grow.

    While new EPA regulation is potentially costing some Georgia Power jobs in the coal plants, is it not also the catalyst for the expansion of plant Vogtle (lots of new jobs there) and Georgia Power’s parent, the Southern Company’s huge investment in the largest biomass power plant in the world in Texas? I’m not defending the regulatory environment… Just pointing out that public utilities are far from ‘normal’ businesses and their operating environments are vastly different than nearly any other industry. We might be better served if the EPA had more authority over public utilities… And then Georgia could stop paying Tim Echols & Co. $100k a year to regulate Georgia Power for us (or, conversely, get rid of the EPA and leave it all up to the states).

  3. ZazaPachulia says:

    Also, heavy regulation in industries utilizing publicly-owned entities (airwaves, public right of way, etc.) tends to traditionally lead to innovation and jobs… IF done properly. (Think: cell phones, digital communication, satellite television, satellite radio, solar panels, etc). Ask a CEO… It’s easier to innovate and find solutions if you know your specific constraints.

    One industry that I am aware of that is completely hemorrhaging jobs and revenue directly because of ramped up regulation is the pharmaceutical industry. That industry, or others like it, would be a good place to begin the “regulation is killing jobs” debate…

  4. saltycracker says:

    PP has many posts on the job losses caused by the EPA in the utility industry. The utility experts are businessmen and will do what they can & build according to regulations or buy from production facilities in other states…all costing……There have been billions of dollars in projects cancelled and thousands of jobs lost from Florida Nuke to the Southwest Solar projects. Not to mention the administration driven force feed to green resulting in taxpayer losses like Solyndra.

    Regulation is good when administered in a rational cost/benefit manner for the public benefit.
    It is not so good when it is a political selection of winners & loosers via misinformation fed to the public. Which is what it is today.

    • ZazaPachulia says:

      Salty, I’m not saying you’re wrong, but the customer base is there for electricity. The population continues to grow and even as we use more efficient electronics, we are using more of them. No matter what the EPA does, those simple facts won’t change. People are going to make money in the utilities and jobs are going to come and go here and there, but the fluctuation is minimal. The wringing of hands over EPA regulation (as it affects state regulated public utilities) is largely political. The industry is so different than anything that is completely in the private sector, that you’re not going to find much traction on the “jobs are being lost to regulation” front when you’re using public utilities as your case study. You can make a case for regulation leading to higher electricity prices and those higher prices forcing other industries to cut costs by trimming their workforces…

  5. saltycracker says:

    Z,
    Believe my first point was the simple facts on the business and of course the customer base will always be there on this side of the industrial age. But, the utility companies don’t consider it a zero sum job game and politically driven regulation is a cost increase. ( http://www.dailymail.com/News/statenews/201106090691 )

    Personally the cost of utilities does not concern me as long as the utility can maintain their profit margin, provide services and most importantly, grow their dividends. However, utility cost does matter to the business community and it does impact jobs.

  6. saltycracker says:

    P.S.
    Two new EPA pollution regulations will slam the coal industry so hard that hundreds of thousands of jobs will be lost, and electric rates will skyrocket 11 percent to over 23 percent, according to a new study based on government data.

    Overall, the rules aimed at making the air cleaner could cost the coal-fired power plant industry $180 billion, warns a trade group.
    http://www.usnews.com/news/blogs/washington-whispers/2011/06/08/coal-regs-would-kill-jobs-boost-energy-bills

    On the good news side the EPA has created some jobs by banning over the counter asthma inhalers and requiring users to use a more costly perscription inhaler with a more ozone friendly drug. Why not allow the preferred drug be sold over the counter in inhalers ?

  7. Dave Bearse says:

    Time and time again, going back to the push for increased minimumg gas milageage requirements in the 70’s, those opposing additional regulation inflate the cost of regulations when later its determined that actual costs are about equal to or less than estimated costs. I admit I have little knowledge concerning details, but here Charlie, er Westmoreland, is inflating an $11B estimate by nearly a factor of ten to to $100B.

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