American Oil and Gas Reporter - December 2016 - 99

which it has never before been used, at
unprecedented scales, on impracticable
deadlines, for species over which USFWS
has no jurisdiction, and to achieve goals
that USFWS is not authorized to require
permittees, applicants, and conservation
groups to achieve."
According to the industry comments,
USFWS's piecemeal approach to conservation and mitigation undermine the
draft policy's stated goal. The discrete
policies that USFWS is promulgating
cannot be viewed in isolation, but are artificially isolated components of a larger,
more comprehensive substantive policy
shift, the groups assert.
They contend the service's decision
to partition a comprehensive policy into
multiple separate ones purposely downplays the magnitude of the policy changes,
impedes stakeholder engagement, makes
it more difficult for stakeholders to fully
evaluate and provide meaningful comments, and leads to situations where justification for one draft policy is provided
by other policies that also are in draft
form.
"The result of this circular justification
and statutory overreach is a suite of
policies that are substantively unworkable,
and which will serve only to undermine
the effectiveness of conservation programs
implemented under the ESA," the industry
groups complain.
They say the draft policy affirmatively
dissuades using permittee-responsible
mitigation, which they note has been the
most used and successful mitigation mechanism. Instead, USFWS favors conservation banks, which the associations say
are not widely available, and landscapescale mitigation requirements, which the
group claims reduce incentives to conduct
mitigation through added complexity,
costs, and delays.
Many aspects of the draft policy
cannot be construed as furthering conservation goals, but rather are land-use
restrictions and user fees that have nothing
to do with compensatory mitigation, the
industry group claims.
The five groups ask USFWS to withdraw the draft policy, and say if the
service wishes to continue with any restructuring of ESA conservation programs,
it should proceed under its statutory authority and through a single rule making
that complies with the Administrative
Procedures Act.
"Although these various policy revisions are characterized as clarifications
and updates to existing policies, the expansive changes should be made through
rule making, especially since agency staff
will treat these policies as regulation,"
the industry groups say.
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Clean Power Plan Likely To Hurt
Low-Income Households More
SACRAMENTO, CA.-The Clean
Power Plan (CPP) could raise electricity
bills for low-income communities nationwide, a study by the Pacific Research
Institute warns.
The Obama administration proposed
the plan in August 2015. If implemented,
the institute says, the CPP would mandate
a 32 percent decrease in carbon dioxide
emissions below 2005 levels from power
generating facilities by 2030.
According to the PRI's The Clean
Power Plan's Economic Impact by Income
Group and Local Area, the burden from
electricity expenditures is higher for
households in low-income neighborhoods
compared with households in wealthier
neighborhoods, even without the CPP.
The plan will exacerbate energy poverty,
the study says.
Under each of its scenarios, electricity
expenditures increase for everyone, but
in some neighborhoods, average annual
electricity costs would increase to 10
percent of family income, with even
higher percentages likely in the poorest
neighborhoods.
The U.S. Supreme Court has stayed
the CPP in response to a lawsuit filed by
several states that claim the plan exceeds
the U.S. Environmental Protection Agency's
authority (AOGR, March 2016, pg. 107).
According to PRI's study, if the plan
is implemented, it will reduce overall
U.S. economic growth, increase average
electricity expenditures, and will make
energy less affordable for many U.S.
households. If the CPP's CO2 reduction
goals are to be met, the study says fossil
fuel sources, particularly coal-fired power
plants, need to be replaced with lowgreenhouse-gas energy sources. By
forcibly revising the domestic energy infrastructure, the study warns the plan
will increase electricity costs and impose
large costs on the domestic economy.
"But, these costs will not be borne
equally. Just as the power sources vary
by state, the costs from the CPP will
vary by state. They also will vary by income group," the study predicts.
Electricity Bills
U.S. Energy Information Administration price and consumption data indicate
the average U.S. customer spent $1,465
on electricity in 2014, which was 2.7
percent of median household income. On
a dollar-expenditure basis, PRI says, the
highest average expenditure per customer

in the continental United States occurred
in South Carolina ($1,774), while the
lowest was in New Mexico ($935). Relative to income, the largest burden from
electricity expenditures was in Mississippi
(4.8 percent), and the smallest was in
Utah (1.5 percent).
A 2014 study from NERA Economic
Consulting estimated the net present value
of the additional consumer energy expenditures because of the CPP between
2017 and 2031 ranged from $366 billion
to $479 billion. Similarly, PRI cites a
report from Energy Ventures Analysis
(EVA) projecting that by 2030, the CPP
will increase wholesale electricity expenditures by $214 billion, compared
with what U.S. households otherwise
would have paid. Except for California
and New Mexico, PRI says the percentage
increase in wholesale electricity prices
will be greater than 10 percent.
Assuming that retail electricity prices
increase by the same percentage as the
estimated increases in wholesale prices,
PRI says EVA estimates price increases
associated with the CPP will worsen the
expenditure burden on all households in
all states; however, the impact will not be
uniform. Some states, such as California,
will experience smaller price increases
(9.4 percent), while others, such as Ohio,
will experience much larger jumps (31.2
percent). Overall, the study projects that
Upper Midwest states will experience the
largest CPP price increases, while Western
states will see the smallest.
Beyond the CPP's projected macroeconomic costs, the study says the plan
will burden low- and middle-income
households disproportionately. Additionally, because of the untenable share of a
lower-income household's budget that
unsubsidized electricity expenditures
would require, the PRI warns the CPP
will worsen the poverty trap-including
the disincentives to work because of the
value of lost income-support benefits-
facing too many households. When coupled with stagnating inflation-adjusted
incomes since 2000, the study says it becomes clear that middle- and low-income
households can ill-afford the CPP's economic costs.
The report was written by Wayne Winegarden and Alexander Specht. It is available
at http://www.pacificresearch.org/fileadmin/images/Studies_2016/CleanPowerPlan_RegressivityReduction_Web.pdf.
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DECEMBER 2016 99

American Oil and Gas Reporter - December 2016

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