Study forecasts higher energy costs

CEDAR RAPIDS - A new study contends the U.S. Environmental Protection Agency's proposed power plant regulations will boost power and natural gas bills for the average Iowa household by more than $730 annually by 2020.

St. Louis-based Peabody Energy, the world's largest private-sector coal company, commissioned and funded the study conducted by Energy Ventures Analysis of Arlington, Va. The study uses 2012 as the base year to match the EPA's base year for the analysis.

The EPA's carbon plan is the centerpiece of President Barack Obama's plan to combat global warming. The cuts are designed to reduce coal as the chief source for electric generation and increase the use of natural gas, renewable power and energy efficiency measures.

Under the EPA's proposed carbon rule, electric generating plants will have to meet more stringent air quality standards to reduce carbon dioxide emissions. In some states, utilities have begun to switch from coal-fired power plants to natural gas-fired generation.

Coal emits twice the carbon gas as natural gas when burned to make electricity.

The Energy Ventures Analysis study concludes the shift from coal to natural gas would increase natural gas demand and prices. It identified a $177 billion increase in electricity costs and a $107 billion increase in natural gas costs nationally by 2020.

In Iowa, the study estimated that annual power costs would increase by $1.6 billion and annual gas costs would rise by $3.1 billion by 2020.

Seth Schwartz, president of Energy Ventures Analysis, said the switch from coal to natural gas generation will come at a time when the EPA is projecting wholesale natural gas prices will more than double.

The EPA is considering a phase in for its requirements over an additional nine years so that coal plants won't be taken out of service early. In its original plan, the agency set mandatory cuts for states by assuming that existing natural-gas plants could run more frequently.

Bloomberg News contributed to this story.