Environmental Protection Agency policies resulting in the shutdown of coal-fired power plants will contribute to a 150 percent price hike for natural gas, accompanied by a 7 percent rise in electricity prices, according to government data.
The U.S. Energy Information Administration (EIA) projects that the accelerating rate of coal plant retirements will cause natural gas prices to rise from $3.44 per million British thermal units (Btu) in 2012 to $5.91 per million Btu in 2025. This would boost retail electricity rates for households and businesses from 9.8 cents per kilowatthour to 10.5 cents per kilowatthour — a 7 percent price jump by 2025.
Gas and power prices are driven even higher by 2040 as more coal plants are shuttered. Natural gas prices will increase 150 percent over 2012 levels and retail power prices will rise 22 percent over 2012 levels as more coal plants are retired.
EIA says that “low natural gas prices and slower growth of electricity demand” have stifled coal’s competitiveness as a power source. But EIA also points out that many coal plants “must comply with requirements of the Mercury and Air Toxics Standards (MATS) and other environmental regulations.”
MATS is one of the costliest EPA regulations ever crafted, costing about $10.2 billion annually. The rule aims to lower mercury emissions and other pollutants from coal plants, but the regulation is resulting in the shuttering of hundreds of coal plants across the country.
EIA says that 50 gigawatts, or 16 percent, of the U.S. coal fleet is set to be taken offline by 2020 — however, 90 percent of these shutdowns will occur before 2016 when MATS goes into full effect. Despite setbacks, EIA notes that coal will still be the single largest source of electricity generation until 2034, when natural gas overtakes it.