Repealing IRA Early Could Spike Electricity Bills, Study Warns
The Inflation Reduction Act (IRA) has been credited with potentially reducing electricity bills for consumers in the United States. However, a recent study suggests that repealing the act early could lead to significant price increases, with some states being more affected than others.
The IRA, if fully implemented, could have reduced the average nationwide electricity bill by $101 in 2030. In eight clean energy leadership states, the savings could have been even higher, averaging $55 per household. This is due to the act's provisions for clean energy and carbon reduction.
However, if the IRA were repealed early, the impact would be severe. Modeling from Resources for the Future indicates that electricity prices in all states would increase by an average of 9%. Without the IRA, states without robust clean energy policies would likely see the highest increases. The study did not specify which states would be most affected or the exact year for such a scenario.
Moreover, the study found that simply introducing a carbon price without returning the revenue to consumers would increase 2030 electricity bills in these eight states by $145. Conversely, returning carbon proceeds to residential ratepayers could decrease prices by an average of 6%. Even with the IRA in place, this measure would result in a net reduction of $92 on bills.
Experts suggest a portfolio approach to implement a carbon tax and accelerate the transition to clean energy. This could involve reinvesting revenue from carbon pricing into clean energy initiatives and returning a portion of the proceeds directly to consumers.
In summary, the Inflation Reduction Act, if fully implemented, could have significantly reduced electricity bills nationwide, with clean energy leader states benefiting the most. However, repealing the act early could lead to substantial price increases, particularly in states without strong clean energy policies. The study highlights the importance of returning carbon revenues to consumers to mitigate these increases.
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