A new report warns that federal policy changes currently under debate in the U.S. Senate could exacerbate Alaska's already high energy costs, which rank among the nation's highest. The analysis, conducted by the University of Washington’s Center for Environmental Health Equity in collaboration with Cook Inletkeeper, the Alaska Public Interest Research Group, and Native Movement, reveals that Alaskans bear the second-highest energy burden nationally, dedicating 4.3% of their household income to energy, compared to the U.S. average of 2.7%.

The report, titled “Energy Burden in Alaska: Understanding Energy Burden for Alaska Communities and Charting a Path Forward,” highlights stark disparities within the state. While urban areas like Anchorage face a median energy burden of 2.3%, rural communities, particularly in Southwest Alaska, experience severe burdens averaging 12%, and northern Alaska at 8.3%. These figures underscore the critical need for policies that alleviate, rather than intensify, energy costs.

Central to the concern are provisions within the proposed federal budget reconciliation bill, colloquially known as the “Big Beautiful Bill,” which threaten to weaken or eliminate key clean energy tax credits, including the Investment Tax Credit (ITC) and the Production Tax Credit (PTC). These credits, previously inaccessible to many cooperative and municipal utilities serving rural Alaska, are crucial for incentivizing renewable energy projects.

Ben Boettger, an energy policy analyst for Cook Inletkeeper, emphasized the timely nature of the report, stating, “The U.S. Senate is considering legislation that would weaken and then eliminate energy tax credits… We hope Alaska’s senators will bear in mind these extreme energy disparities as they consider where they stand in upcoming debates and votes on tax credit changes.” The report advocates for increased investment in community-scale renewable energy, especially for rural areas reliant on costly diesel imports, and expanding energy efficiency programs like weatherization and the Low Income Home Energy Assistance Program (LIHEAP), which the current administration has also sought to eliminate.

Further analysis by the Clean Energy Buyers Association (CEBA), a Washington, D.C.-based industry group, projects significant economic fallout for Alaska if these tax credits are removed. CEBA estimates a loss of 600 jobs, an average $170-per-household reduction in income, and increases in electricity prices (0.8% for households, 0.9% for businesses) and natural gas prices (2.5% for households, 4.3% for businesses). Overall, the state’s gross domestic product could decrease by $50 million, exacerbating Alaska’s current second-to-last ranking in U.S. GDP growth rates. These findings underscore the profound economic and social implications of federal energy policy decisions on states with unique energy challenges.