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Electricity Prices · Energy Policy · Natural Gas · Tax Credits
Congress is considering rolling back Inflation Reduction Act of 2022 tax credits (ITC & PTC) for electricity investment, a move that will make it more costly for the private sector to construct and deliver affordable electricity production across diverse sources, exposing Americans to higher electricity bills.
Natural gas currently accounts for 43% of national electricity generation, and its prices are surging due to increased data center demand for AI, growing liquefied natural gas (LNG) export capacity, and declining oilpatch investment. The article states that during the 2021-22 energy shock, states with high shares of natural gas and petroleum in their generation mix experienced significantly higher electricity inflation, with a 20% larger share of oil & gas generation implying an additional 7% increase in electricity prices from 2020Q4 to 2023Q1.
Electricity prices increased 0.9% in the last month and 4.5% over the past year, with natural gas prices up over 100% from a year ago. Rolling back the ITC and PTC undermines the development of nuclear, geothermal, hydropower, energy storage, wind, and solar technologies, leaving the American energy system under-diversified and vulnerable to natural gas price volatility.