As a new administration prepares its energy agenda, many Americans wonder how potential policy changes might affect their household budgets.
A recent study conducted by NERA Economic Consulting and released by the Clean Energy Buyers Association (CEBA) in January 2025 revealed that the Inflation Reduction Act (IRA) is delivering substantial economic benefits for American families.
According to the research, repealing the IRA tax incentives – specifically the federal clean energy technology-neutral investment and production tax credits – could significantly increase electricity prices for average American households. The study estimates that average residential electricity prices could be 6.7% higher by 2026, which translates to approximately $110 more per year on individual utility bills, and 7.3% higher by 2029. For businesses, electricity costs could rise by 9.7% by 2026 and 10.6% by 2029, costs that would likely be passed on to consumers through higher prices for goods and services.
The impacts would be particularly pronounced for residents and businesses in several states in the next year alone. Without these incentives, Wyoming households and businesses could see their average electricity costs jump by nearly 30%. Other significantly affected states include New Mexico, where average electricity prices would rise almost 25%; Illinois, the District of Columbia, Washington, and North Carolina, where the prices increase by over 17%; Kansas and Missouri, where prices would rise by over 15%; and South Carolina, where they would rise by nearly 15%.
Overall, the study expects residential electricity prices to rise approximately 12% in midwestern states and 10% in Western states in the next four years, representing the most significant regional increases. The tech-neutral tax credits relieve pressure from the existing electricity supply and allow for lower prices for additional supply. Repealing those credits would, in turn, add pressure to the existing supply and increase prices for additional supply. The CEBA press release explains, “Put simply, without the credits, the new marginal price for resources would go up, in turn meaning higher electric prices for Americans.”
Rich Powell, CEO of CEBA, said “Combating the cost-of-living crisis for American consumers and fueling U.S. economic growth relies on more private investment in a diverse menu of clean energy sources. Maintaining the federal investment and production tax credits will enable electricity producers, buyers, and their customers to supply an abundance of low-cost energy sources. Weakening or repealing these provisions would unequivocally mean higher electricity costs for U.S. households and businesses, especially in America’s heartland.”
Repealing the credits would also result in 167 gigawatts less grid capacity. Meanwhile, the U.S. is racing against China to generate more energy to support modern manufacturing and Artificial Intelligence (AI) capabilities.
For many American families struggling with inflation, these incentives are a buffer against rising energy costs. The tax credits lower the cost of deploying clean energy technologies, creating more supply and consequently helping to moderate electricity prices. As debates continue about America’s energy future, these findings emphasize the direct pocketbook impacts that energy policy decisions could have on everyday consumers nationwide.
This article was created on February 27, 2025 with the assistance of the generative artificial intelligence (AI) tool Claude 3.7 Sonnet, using the linked company websites, press releases, reports, or external media coverage as inputted source material. It was then reviewed, fact-checked, and edited by one or more team members to ensure factual accuracy and consistency with editorial standards before publication.
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