The bottom line for the entirety of this new legislation is as follows: Given expected cost of natural gas, retail costs for electricity are expected to reduce 5.2-6.7 percent in the next ten years which will save consumers $209-278 billion. Smaller electric bills will result in cheaper cost of goods and services, saving the average household approximately $170-220. Even under a high natural gas price scenario, consumers are protected from the instability of natural gas prices with lower electricity cost.
At the heart of the IRA’s power sector provisions, a long-term extension and reformation of clean energy tax credits are included. These are the production tax credit (PTC) and the investment tax credits (ITC) for solar, wind, and storage. Since the PTC for wind is expiring and the ITC for solar is phasing down, the IRA will extend and/or modify those provisions until 2025 before new provisions from the Clean Energy for America Act. Some of these items are tax credits for carbon capture and storage with a new production tax credit for current nuclear electricity generating units. Given the delays in clean energy deployment, this new legislation will have initiatives for businesses and consumers where the IRA provides an extensive bonus structure for projects meeting certain requirements. A great example provided from Resources for the Future: “projects meeting wage and apprenticeship requirements are eligible for a 5X multiplier over a base rate, bringing the PTC to a value of 2.5 cents/kWh (adjusted for inflation) and the ITC to 30 percent. Additional, separate bonuses apply to clean energy projects located in energy communities and those using domestic content. The individual bonuses for qualified projects are stackable, and, when taken together, can result in a PTC of 3.0 cents/kWh or an ITC of 50 percent.”
By transitioning to a cleaner electricity mix as this new legislation is directed, the goal is to protect taxpayers from the instability of natural gas prices. While the natural gas prices cannot be as controlled, we have the power to generate electricity via solar and wind methods. This will benefit our planet and wallets for lower electricity costs. Inertia Resources, Inc will be happy to work with you and your utility bills to get the best prices available. Contact Us today!