This is National Consumer Protection Week, when the federal government partners with state agencies, corporations, and interest groups to help “consumers nationwide to take full advantage of their consumer rights and make better-informed decisions.”
The irony is that while the federal government claims to be looking out for consumers, it also poses a great danger to them. Look no further than the Environmental Protection Agency’s Clean Power Plan.
Finalized last summer, the Clean Power Plan force utilities to choose between providing reliable and affordable energy to their customers or reducing their output to serve special interests. It does so by imposing different criteria on each state—that is, the federal agency determined how much carbon each individual state can emit.
Consumers’ Research, the organization I direct, has joined Nevada Attorney General Adam Laxalt in filing an amicus brief with the U.S. Court of Appeals for the District of Columbia Circuit challenging the new rules. With Nevada on board, there are now 29 states challenging the rules in federal court.
There are major constitutional and legal reasons to distrust the regulations. For one thing, the EPA lacks statutory authority to impose the standards; for another, the regulations infringe upon the regulatory authority of individual states and the voice of the citizens in those states. The regulations are so onerous, and the EPA’s authority to impose them so dubious, that last month the Supreme Court took the unusual move of granting a stay against them; that means the plan is on hold as the legal challenges against it work their way through courts.
My greatest concern, however, is the damage that these regulations would inflict on the average American consumer.
In an interview with the San Francisco Chronicle back in 2009, President Obama explained that “under [his] plan of a cap and trade system, electricity rates would necessarily skyrocket….Whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money onto consumers.” While it’s nice to hear the president acknowledge the fundamentals of capitalism, his lack of concern—empathy, you might say—for the financial situation of the average American is alarming.
How much money will companies pass onto consumers? The consulting firm National Economic Research Associates (NERA) estimates that customers would pay between $220-$292 billion total in the years 2022 to 2033 with an average annual increase of $29 and $39 billion (in 2015 dollars). NERA also estimates that the “average annual U.S. retail electricity rate” would increase between 11% to 14%, and that “losses to U.S. consumers [would] range from $64 billion to $79 billion.”
Consumers would also suffer from less reliable electrical service—even as they pay more for it. Remember, the entire purpose of the new regulations is to promote unproven technologies above time-tested coal and natural gas powered plants. Wind and solar is simply more expensive than fossil fuels, as well as less consistent and reliable.
When EPA Administrator Gina McCarthy testified before the Senate Environment and Public Works Committee in 2014, she appealed to the benefits consumers would receive from the new regulations, claiming that “the great thing about this proposal is it really is an investment opportunity. This is not about pollution control. . . . It’s about investments in people’s ability to lower their electricity bills by getting good, clean, efficient appliances, homes, rental units.” It will, she said, “position the United States to continue to grow economically in every state, based on their own design.”
At least she’s keeping the American consumer in mind; unfortunately, her agency’s regulations would do the opposite of what she claims.
During National Consumer Protection Week, it’s worth remembering that, as the EPA’s Clean Power Plan illustrates, sometimes consumers need protection from the government itself.