Low-Cost Coal Ensures Affordable Energy for American Families

For working families, less money spent on electricity bills means more money for other household necessities.
That’s why low-cost coal is so important. One of the primary advantages of using coal is its low cost – and fuel price is a major component in the cost of electricity. For example, on a national basis, coal is around one-third the cost of natural gas – the second most widely used fuel to make electricity.

Also, the cost of generating electricity from coal is one-third to one-fifth the cost of producing electricity from natural gas.

Think about this. According to an American Coalition for Clean Coal Electricity (ACCCE)-commissioned study based upon data from the Energy Information Administration (EIA) and other government sources, household energy expenditures (electricity, home heating and transportation costs) have more than doubled in the last 10 years. But coal’s affordability has helped limit these rising costs. And that has meant more money for child care, food and other family essentials. Read more +

The low price of coal, relative to other fuels, is not a passing trend. From 1989 to 2008, average annual natural gas prices fluctuated widely between a low of $2.16/MMBtu in 1991 and a high of $9.66/MMBtu in 2005, a difference of $7.50/MMBtu. But over the same period, coal prices have varied modestly – from a low of $1.20/MMBtu in 2000 to a high of $2.52/MMBtu in 2008, a difference of only $1.32/MMBtu. Going forward, the EIA projects that the fuel price for natural gas is expected to increase by 60 percent. That is a price most American families simply can’t afford.

A key finding of another study commissioned by ACCCE is that families who live on low or fixed incomes are experiencing the highest per capita household energy costs. On average, 60 million American households with annual incomes below $50,000 spend 22 percent of their after-tax income on energy-related costs. That’s more than 20 cents of every dollar earned. What’s even more troubling is per capita spending for energy is even higher for lower-income households. Those families earning between $10,000 and $30,000 per year (after taxes) – and that’s 23 percent of American households – are spending nearly 22 percent of their after-tax income on household energy-related costs.

Since fuel prices are an important component in determining the cost of electricity for consumers, using coal typically translates into more affordable electricity rates. According to the EIA, four of the five states with the lowest retail electricity costs (Kentucky, Utah, West Virginia and Wyoming) rely upon coal to generate 80 percent or more of their electricity.

Keeping electricity prices affordable is critical – particularly as we all work hard to lift the U.S. out of an economic downturn. That is why it’s so important that coal remains an integral part of our country’s energy portfolio. <<