Solar panels at the Cold Climate Housing Research Center campus in Fairbanks are seen on June 5, 2025. More investment in renewables will help lower Alaska's high energy costs, but the budget bill that Congress is debating would reduce renewable investments. (Photo by Yereth Rosen/Alaska Beacon)
Alaskans pay nearly the highest percentage of their household incomes on energy of any state, and federal policy changes proposed in the budget reconciliation bill currently being debated in the U.S. Senate would make the problem worse, according to a report by the University of Washington’s Center for Environmental Health Equity and three Alaska organizations.
The report found that Alaska’s energy burden — the percentage of household income that is spent on energy — is the nation’s second highest, at 4.3% compared to a national average of 2.7%. Maine has the highest average energy cost burden, at 4.5%, according to the report’s authors.
The disparities between cost burdens in urban and rural Alaska are stark, the report said. Outside of urban areas like Anchorage and the Matanuska-Susitna Borough, where the median costs amount to 2.3% of household income, the cost burden in rural Alaska is considered severe, the report found.
In Southwest Alaska, the residents spend an average of 12% of their household income on energy. In northern Alaska, the burden is 8.3%, according to the report, titled “Energy Burden in Alaska: Understanding Energy Burden for Alaska Communities and Charting a Path Forward.”
Along with UW’s Center for Environmental Health Equity, other organizations writing the report were Cook Inletkeeper, the Alaska Public Interest Research Group and Native Movement.
In written statements, representatives of the Alaska organizations said provisions in the so-called “Big Beautiful Bill” would further burden state residents, especially in rural areas.
“This report contains very timely information,” said Ben Boettger, energy policy analyst for Cook Inletkeeper. “The U.S. Senate is considering legislation that would weaken and then eliminate energy tax credits — namely the Investment Tax Credit and the Production Tax Credit, threatened by the ‘Big Beautiful Bill’ — that until recently weren’t available to the cooperative and municipal utilities that serve most rural Alaskans. 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 makes a series of policy recommendations, but the proposals in the bill would make changes in the opposite direction.
The report recommends increased investment in renewable energy projects, notably in the highest-cost areas of rural Alaska. “Long term, bringing on community-scale renewable energy, especially for communities dependent on fly-in and barge-in diesel is the best and most accessible way to reduce energy burdens and support thriving communities,” the report said.
But the bill proposes to do the opposite by ending tax credits for clean energy projects and imposing new taxes on wind and solar projects. And even Elon Musk, once a close Trump adviser, has criticized those elements of the bill.
Already, more than $14 billion in clean energy projects have been eliminated this year because of Trump administration policies, according to one new analysis.
The Alaska report recommends expanding the weatherization program that helps homeowners achieve energy efficiency. Outside of the bill, the Trump administration is also seeking to eliminate the Low Income Home Energy Assistance Program, known as LIHEAP.
Other recommendations of the Alaska report focus on state policy. Among the steps that it said should be taken at the state level is an expansion of Alaska’s Power Equalization Program, which subsidizes rural electricity. Other recommended state-level policies include full funding of the Alaska Renewable Energy Fund and more administrative support for the state’s new Green Bank, the report said.
If tax credits for clean energy are eliminated, consumers across the nation will face higher costs, according to a new report from one national organization.
The Clean Energy Buyers Association, a Washington, D.C.-based industry group, calculated costs of the credit elimination in 28 states, including Alaska.
For Alaska, the end to the tax credits will mean 600 fewer jobs, an average $170-per-household loss in income, a 0.8% increase in household electricity prices, a 0.9% increase in business electricity prices, a 2.5% increase in household natural gas prices and a 4.3% increase in businesses’ natural gas prices, according to the organization’s analysis.
It would also cause an overall $50 million decrease in state gross domestic product. Alaska’s gross domestic product growth rate currently ranks second-to-last among the U.S. states.
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