Changes in regulatory requirements, market structures, and operational technologies have introduced complexities that traditional ratemaking approaches can’t address. Poorly designed rates lead to...
The electricity price increases from the proposed EPA Utility MACT will act as a regressive tax on the elderly.
EPA is proposing Maximum Achievable Control Technology (MACT) regulations, and revisions to the New Source Performance Standards, for coal- and oil fired electric utility steam generating units under the Clean Air Act. These Utility MACT regulations are highly controversial and could result in significant impacts on coal power plants, electric reliability, electricity rates, and the national and state economies. We conducted a study of the potential impacts on elderly persons in Florida of these regulations and found the implications to be troubling.
Over the past several years, a number of studies have been conducted of the potential impacts of EPA’s proposals on the U.S. electricity system and economy. These studies indicate serious potential impacts, and they identify the Utility MACT regulations as among the most troublesome. Many of these studies recommend delay or reconsideration of the EPA regulations.
In Florida, we estimate that the EPA Utility MACT regulations would by 2015 result in an average electricity rate increase of nearly 25 percent, a gross state product (GSP) loss of nearly $18 billion, annual job losses of nearly 160,000, and lost annual state and local government revenues of $2.1 billion.
Increases in electricity prices will affect all Florida residents, but high electricity prices are particularly burdensome for those with limited budgets and fixed incomes. The electricity price increases from the proposed EPA Utility MACT will act as a regressive tax on the elderly, decrease their discretionary income and economic well-being, increase their energy burden, and impair their health.
There is a determinant demographic trend in the U.S. and Florida over the next half-century: the increasing portion of the population that will be elderly. In Florida, senior citizens comprise a larger portion of the total population than in any other state. By 2030 the percentage of the population 65 and older in Florida will be higher than in any other state and will be more than 40 percent higher than the national average.
Approximately 3.1 million persons aged 65 or older currently reside in Florida. Of these, about 325,000 are classified as living in poverty; in Florida, poverty level annual income is defined, for a single person, as $10,900, and for a family of two as $14,700.
The mean Social Security income of seniors in Florida is about $16,500 and the mean retirement income of these persons from all sources is about $21,900. Thus, millions of Florida seniors are living on fixed incomes relatively close to the poverty line, and their numbers are forecast to increase significantly over the next two decades. The electricity cost increases resulting from Utility MACT would have a major negative impact on these seniors—especially those at or close to the poverty line.
Utility MACT will increase the residential electricity costs of seniors in