Our two senators are well aware that “Alaska is different.” But as Lisa Murkowski and Dan Sullivan consider their stances on the One Big Beautiful Bill Act, they should remember that the economic incentives shaping Alaska’s energy infrastructure are, in fact, different – and not in ways that benefit their constituents.
Energy burden is the percentage of a household’s annual income that is spent on heat, electricity, and fuel. The average U.S energy burden is 2.7%. Alaska’s is 4.3%. But that’s only the beginning. New research by the University of Washington, jointly commissioned by Cook Inletkeeper, Native Movement, and the Alaska Public Interest Research Group, exposes sharp disparities hiding within Alaska’s average. By and large, lower income households in Alaska pay much larger percentages of their annual income just to heat and run their homes.
Burdens between 6-10% are considered “high,” and burdens above 10% “severe,” according to the U.S Dept. of Health and Human Services. Northern Alaska’s median energy burden is “high,” at 8.3%. In Southwest Alaska, it’s a “severe” 12%. In the state’s lowest income households , the burden spikes to a median of 22.9%, and those in poverty face a 10.1% median burden.
Households that spend more than 10% of their income on energy are so rare in the Lower 48 that not even 1% of census tracts have average burdens at this level. But in Alaska, 8.5% of census tracts hit this average. 14.7% of Alaska’s census tracts are highly or severely energy-burdened, the greatest share of any state.
Road-system Alaska fares slightly better. The Kenai Peninsula (average burden 4.1%), Mat Su (3.4%), and Fairbanks (4.1%) boroughs are all close to the statewide average of 4.1%. Anchorage does slightly better than the national average, with a burden of 2.2%, compared to the nation’s 2.7%. But the Cook Inlet gas responsible for that cheaper energy is becoming more and more expensive to extract, and alternative gas will be slow to arrive and more expensive. Without new investments, energy prices will climb quickly.
Those who may invest in Alaskan energy — whether that means Cook Inlet gas, village solar farms, or Railbelt wind — find a skewed balance of challenges and rewards compared to Lower 48 investment prospects. The limited potential reward of a tiny customer population makes the logistical hurdles of sparse existing infrastructure and long-distance supply chains even less attractive. With Alaskans thinly spread over a rugged landscape, the distribution costs of serving each person are higher as well. It’s no surprise, then, that for-profit utilities are scarce in the state. From rural microgrids to the four Railbelt utilities, the great majority of Alaskans get their electricity from member-owned co-ops or city-owned utilities.
Most of Alaska’s energy is provided by member-owned co-ops or municipal providers. The federal Investment Tax Credit (ITC) and Production Tax Credit (PTC) for renewable energy have existed since 1978 and 1992, respectively, and have helped build viable wind and solar industries in the Lower 48. Tax credits, however, didn’t help non tax-liable entities like our municipal and co-op utilities. Co-ops finally gained access to PTCs and ITCs under 2022’s Inflation Reduction Act (IRA). In addition to setting the baseline ITC at 30% of project costs, the IRA lets non tax-liable utilities take the credit as cash. With various bonuses, the ITC can pay up to half a project’s cost, while the PTC pays 3 cents per kilowatt-hour generated by clean energy.
The so-called “One Big Beautiful Bill Act” (which passed the U.S. House in May on a 215-214 vote) would gut the ITC and PTC programs — just as Alaska begins to benefit from them. Rep. Nick Begich voted in favor of the act.
Even before the bill, the mere possibility of credit repeals already knee-capped important Alaskan projects such as the Puppy Dog Lake solar farm in Nikiski. It would have been Alaska’s largest solar farm, but when a key investor withdrew support in February, freezing the project, the developer said uncertainty over investment tax credits was a factor. With gas costs rising, the Railbelt utilities need to make and execute long-range, coordinated plans to avoid energy price spikes. Uncertainty, and a fluctuating federal landscape, makes an already difficult job much harder.
In May, Sen. Murkowski joined three fellow Republican senators to sign a letter standing against “a full-scale repeal” of energy tax credits. The letter stated this “would create uncertainty, jeopardizing capital allocation, long-term project planning, and job creation in the energy sector and across our broader economy.” She must stand firm in this commitment, and we hope she’ll protect the credits as currently written so that Alaska can benefit from their full potential. Sullivan has not made a public commitment, but we hope he’ll do the same. We cannot afford to lose these credits now — not when we’ve only just started to use them. Not when rural Alaskans are paying 20% of their income just to keep the lights on. Not when the cost of inaction will fall hardest on the most vulnerable communities in our state.