A proposal from the House Ways and Means Committee is calling for a reduction in government spending. Rhodium Group reported that the bill could raise the energy costs of American households. Potential cuts to energy tax credits may lead to a 7% increase in energy bills by 2035.
What's happening?
Congress is developing a budget reconciliation package. At the same time, the committee is planning reductions to energy tax credits. Many of these expanded credits in 2022 encouraged clean energy adoption.
Rhodium Group suggested that this change is akin to a full repeal of crucial energy tax credits.
The committee needs at least $1.1 trillion in savings to meet budget goals. To make extensions of other tax cuts possible, members are targeting energy credits.
Why are energy tax credits important?
Without these credits, data indicates a spike in economic disparity for homeowners. Repealing energy tax credits could increase household energy costs by $95-$290 in 10 years.
Part of this increase (41%-68%) would come from higher transportation energy costs. Fewer electric vehicles on the road, for example, means more reliance on gasoline.
Gas prices would increase by an estimated 1%-5%. Electricity bills could also rise by $46-$72 each year.
Industrial producers may have higher fuel costs. Expenditures could reach $9 billion to $11 billion in 2035 because of rising electricity rates. Increased energy costs sow economic uncertainty at a time when inflation is a concern.
What can I do to help manage energy costs?
While policy debates continue, homeowners can take steps to manage their energy expenses.
One of the most effective ways to save money on home energy and lower your carbon footprint is by going solar. Installing solar panels can reduce or even remove your electricity bill over time.
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Taking control of your home energy can provide stability and savings, regardless of shifts in national energy policy.
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