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Energy Takes Twice as Much Income for Half of U.S. Households

Energy costs for U.S. households will almost double this year from 2001, consuming a fifth of the annual income for half of American homes, according to a study by a utility group that opposes limits on coal use.

The American Coalition for Clean Coal Electricity, which includes Atlanta-based Southern Co. and Peabody Energy Corp. in St. Louis, said the 50.4 percent of households earning less than $50,000 may pay even higher costs as regulators consider limits on coal-burning power plants.

The study is “further evidence that these regs are going to cause an impact on the American family,” said Lisa Camooso Miller, vice president for media relations for the Washington- based coalition, in an interview.

The group said it will cite the study’s results as it opposes greenhouse-gas and clean-air regulations by the Environmental Protection Agency that target coal-fired plants.

Rising gasoline prices accounted for four-fifths of the increase cited in the study. Household electricity costs have increased at a slower pace because coal generated about half the nation’s power during the years studied, according to the group.

For this year, energy costs for about half the U.S. households will be 21 percent of total income, up from 12 percent 11 years ago, according to the study.

The report said the EPA’s mercury and air toxics rule, issued in December, would raise electricity costs, exacerbating the strain from higher energy expenses.

The EPA’s first standards for mercury pollution from coal- fired power plants set rules that environmental and health groups say will lead to the biggest cuts to air pollution in two decades.

EPA Estimates Disputed

The EPA has said the air toxics rule will cost utilities about $9.6 billion to comply. The rule will save lives and result in as much as $90 billion in annual benefits, the EPA said.

The EPA estimates its mercury rule will increase electricity costs about 3.1 percent. The coal group, in a separate study, estimated the EPA rules might raise costs 10 percent to 19 percent at times of peak demand.

The coal study, which examined four income levels, estimated energy will represent 78 percent of total spending for the poorest families, or those earning less than $10,000 a year.

The estimate excluded payments from the federal and state energy assistance programs, such as the Low Income Home Energy Assistance Program. Households are eligible if their annual income doesn’t exceed 150 percent of the poverty level or 60 percent of the state’s median income, whichever number is higher, according to the program’s guidelines.

‘More Vulnerable’

“Lower-income families are more vulnerable to energy costs than higher-income families because energy represents a larger portion of their household budgets,” according to the study, which relied on Energy Information Administration data.

Energy costs this year will represent 24 percent of after- tax income for families earning $10,000 to $30,000, up from 14 percent in 2001. Families with after-tax income from $30,000 to $50,000 will spend 7 percent of their earnings on electricity, according to the study.

Energy represents about 9 percent of budgets in households that bring in more than $50,000, according to the study.

To contact the reporters on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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