Did SCOTUS Help Lower Energy Prices?
Facility and business managers across the country are acutely aware of the increase in energy prices that shows no signs of reversing any time soon. Considering this, the question arises whether energy prices might be reduced as a result of the U.S. Supreme Court’s (SCOTUS) June 30, 2022, ruling that the Environmental Protection Agency (EPA) had overstepped its authority concerning electric power plant emissions. The short answer is it largely depends on your state. We will examine the long answer in the following.
West Virginia v. EPA
Without getting too far into the legal weeds, SCOTUS’ ruling was in response to a lawsuit filed by states led by West Virginia against the EPA concerning the latter’s authority under the 2015 Clean Power Plan (CPP). Although the CPP has since been superseded, SCOTUS ruled that Congress gave the EPA authority to regulate power plants relative to emissions reduction technologies. SCOTUS further ruled under the “major questions doctrine” that Congress had not given the EPA authority to regulate power plant emissions by shifting electrical generation to cleaner sources.
An underlying element of the ruling was the “nondelegation doctrine” which states that one branch of government cannot delegate its constitutional authority to another branch of government. Thus, SCOTUS opined that only the elected representatives in Congress had the constitutional authority to create regulations replacing fossil-fueled electrical generation with other generating sources.
Will Prices Go Down?
While the SCOTUS decision essentially puts a halt to the EPA’s not-so-subtle push to shut down fossil-fueled electrical generation, Congress could theoretically pass legislation to accomplish the same end. Given the current political, economic and energy situation it seems extremely unlikely, however, that Congress could or would act anytime soon.
On the other hand, numerous states have put legislation in place that calls for the elimination of all generating sources that are not carbon emissions free. Generally, such legislation goes by the name, “Renewable Portfolio Standards”, or RPS. As regulatory mandates, RPS near universally establish percentage targets for the amount of in-state electrical generation coming from renewable sources such as solar photovoltaic or wind and frequently include targets for energy storage as well.
The short answer to the question about energy prices going down is that it depends on where you live. However, there is more to the complete answer.
RPS and Energy Prices
Of developed countries, Denmark, Germany, Belgium and the U.K. had the world’s highest electricity prices in 2021 with average prices ranging from 0.28 to 0.36 $/kWh. In the U.S., California had an average electricity price, as of April 2022, of 0.21 $/kWh while the average U.S. price was 45% less at 0.12 $/kWh. The common element shared by all these high electricity prices is renewable generation.
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The four European countries mentioned are in the top 7 countries worldwide (Germany, #1 and the U.K., #3) with the highest percentage of renewable energy generation. Similarly, California ranked #1 in the U.S. for renewable energy generation, but that achievement has also made it the largest electricity importer of all the states at roughly 30% of their total consumption.
It is a fact that many Renewable Portfolio Standards are based on political timetables rather than criteria such as cost, efficacy or practicality. Moreover, there is growing public acknowledgement that the current state of renewable energy and storage technologies cannot replace 100% of fossil-fueled electrical generation by 2050 to meet the zero emissions deadline. This means that the rush to meet RPS targets by closing fossil, and sometimes nuclear, generating plants is wastefully premature.
SCOTUS and Energy Prices
The SCOTUS decision in West Virginia v. EPA may help keep your energy costs from rising as rapidly as they might have had the EPA been allowed to pursue its renewable energy plans. However, if you live in a state with an RPS calling for 100% renewable electrical generation such as:
the ruling is likely to have no effect on your energy prices. With the EPA reigned in, energy prices will depend more on how the states decide what type and how much renewable generation is practical and economically feasible.
Manage Rising Energy Costs
Companies that are part of EQUANS MEP Services have been serving their communities for more than 75 years. Today, the efficient use of all types of energy is a critical consideration in all the services we provide. This is evidenced by the fact that we have no constraints when it comes to selecting the best technology or brand to meet our clients’ needs. Whether you need 24-hour emergency or preventative maintenance service or a turnkey HVAC or MEP installation, contact MEP Services.