Under President Biden, Washington spent four years making affordable electricity more difficult to produce, and the result was higher prices for consumers. Just days ago, though, the Trump administration took a major step in reversing that trend by scrapping a Biden-era power-plant rule that was forcing inexpensive plants to shut down.
The Biden rule was sold as climate policy, but its real function was to shutter coal plants and discourage new natural-gas plants. It required existing coal plants to capture most of their carbon emissions using expensive, inefficient, and unproven carbon-capture technology. The cost meant many plants would operate at a loss, so they planned to close.
Of course, the costs didn’t stop there. When a paid-off coal plant producing reliable, low-cost power is forced offline years early, and a utility has to add unreliable, expensive solar and wind to its portfolio, the consumer foots the bill. Utilities pass all these costs on to ratepayers in the form of higher utility bills.
The EPA estimates repeal will save more than $300 billion, money that would otherwise have come out of household utility bills and business operating budgets. That means much-needed relief is on the way for Americans who have been getting squeezed.
Residential electricity prices have risen 41.4 percent since January 2021, almost doubling wage growth over the same period. Families who saw their real incomes eroded by Bidenomics-era inflation were then hit with higher power bills on top of it.
The timing couldn't have been worse. Just as regulators were choking off the growth of dispatchable generation, demand began to surge. Artificial intelligence and the data centers that power it are increasing electricity consumption at a pace the grid hasn't seen in years. Add the reshoring of American manufacturing, and you get a mismatch between growth rates in supply and demand.
Basic economics tells you what happens next: prices rise. Even if total generation didn't fall outright, slowing the growth of reliable and inexpensive supply at the precise moment demand is accelerating puts upward pressure on prices.
Grid operators have been sounding the alarm about reliability shortfalls for years. Retiring coal capacity, which runs whether the wind blows or the sun shines, while demand soars is a recipe for both higher prices and a less stable grid. Likewise, preventing new natural-gas capacity, which would easily ramp up or down to meet changing demand throughout the day, is a recipe for blackouts during peak demand.
Fortunately, scrapping the Biden-era rule means utilities can now make decisions based on cost and reliability rather than regulatory coercion. Coal plants that still have productive years left can keep providing low-cost, affordable electricity for consumers. Natural gas developers can build new plants without a compliance cliff looming in the 2030s.
The increased supply means downward pressure on prices — which American families desperately need right now. Furthermore, additional power generation is exactly what an economy needs when it’s racing to win the AI race against adversaries like China.
This decision, part of the Trump administration's broader deregulatory agenda, has been one of its most underappreciated economic policies. The regulatory compliance costs imposed by the Washington, D.C. bureaucracy fall on businesses, which pass them on to families through higher prices, lower wages, or lower returns on investment.
Cutting red tape reverses these effects, and the Trump administration has been on a cutting spree, axing more than 120 rules for each new one imposed — a record!
Critics will insist the well-intentioned rule was necessary, and the repeal will be fought in court. But policy should be judged by its results, not its intentions. A rule that raises costs for every household and business, strains the grid, does nothing for the environment, and hands a competitive advantage to other countries is a lousy deal for Americans.
Affordable, reliable electricity is the foundation of a modern economy. It powers homes, factories, and now the computing infrastructure that will define the next generation of economic growth. The Trump administration understands this and is now protecting the very foundation that the Biden administration was undermining with excessive regulation.
E.J. Antoni, Ph.D., is chief economist and the Richard Aster fellow at the Heritage Foundation and a senior fellow at Unleash Prosperity.
Editor’s Note: Thanks to President Trump’s leadership and bold policies, America’s economy is back on track.
Help us continue to report on the president’s successes and combat the Democrats' lies about America's economic revival. Join Townhall VIP and use promo code FIGHT to receive 60% off your membership.
Join the Conversation
VIP members get the ability to comment on articles.