When Congress passed the One Big Beautiful Bill Act this July, it clawed back billions of dollars from the Biden administration's landmark climate legislation, the Inflation Reduction Act.
Programs under the IRA that were set to expire in the 2030s are now ending this year, including a tax credit for new electric vehicles, which is set to expire at the end of this month.
Rocky Mountain Community Radio's Caroline Llanes spoke with Will Toor, the executive director of the Colorado Energy Office, to hear more about impacts for Coloradans.
Editor's note: This interview has been edited for length and clarity.
Llanes: For Coloradans who have been looking to buy an electric vehicle, are they now under a time crunch to do that? What impacts could we see to electric vehicle programs here in Colorado?
Toor: There has been a $7,500 (federal) tax credit for new electric vehicles that was in place through 2032. That now will expire in a few weeks. On September 30th, the federal EV tax credit goes away.
When it comes to electric vehicles, there's both the federal tax credits and then we have a number of state programs that support EV adoption that include right now a $3,500 state tax credit, as well as our vehicle exchange program for low income Coloradans that allows low income residents who are turning in "gas guzzler" to get up to an additional $6,000 towards a cost of a (new) electric vehicle, or $4,000 towards the cost of a a used electric vehicle. And we have an additional tax credit bump of $2,500 for any vehicle that has a manufacturer suggested retail price of below $35,000. So, think of vehicles like say the Nissan Leaf or the Prius Prime plug-in hybrid vehicle.
Those will all continue, unchanged by the federal action. But it does mean that the total financial incentives available for buying an EV go down very significantly after September 30th. You don't actually have to have the vehicle on hand by September 30th, but you have to have signed a binding contract for it even if it isn't delivered by that point. So one takeaway to your listeners would be the next four weeks are going to be your best time to buy an electric vehicle.
Llanes: So what about other programs? Could Coloradans see any potential impacts to other things like say for example, energy efficiency upgrades for their homes?
Toor: Another change is on federal tax credits that were focused on home energy efficiency improvements, which will go away at the end of the year. Those also were credits that were in effect through 2032, and they were slightly more complicated than a EV tax credit because there's lots of different things you can do to your home. But as an example, you could get $2,000 towards the cost of installing high efficiency electric key pumps and you could get, I believe up to 30% of the cost of other home energy improvements. And that will be going away at the end of the year. And there's a real impact on residential solar tax credits, which will be going away at the end of the year.
There are quite a few other programs at the state and utility level in addition to the federal incentive. So for instance, the state has an electric heat pump tax credit that will continue, regardless of what happens with the federal credit. And given the scale of many of the utility programs, especially if you happen to be within Xcel service territory, they have some of the larger rebates available. You know, the loss of the federal credit is a smaller impact than it is on the EV side.
The other thing that I would say is that when it comes to home solar, the federal tax credits are a pretty big part of the finances for home solar. And so now to the end of the year is a great time to be buying solar. Similar to an EV, if you've been thinking about getting a solar system, now's the time to pull the trigger and get that system in place before the end of the year.
Llanes: Okay. So we've discussed that consumer level. What about at the utility scale? Are utility companies here in Colorado going to see any impacts and will those have any trickle down effects to rate paying customers?
Toor: The really big impact on utilities is that (the OBBB) sunsets the tax credits for wind and solar, which again, were going to be in place into the next decade and are now going to sunset over the next couple of years.
Wind and solar will still be the lowest cost sources of new energy, like if you look at what it costs to build wind or solar and you compare it to like a new gas plant or a new coal plant, wind and solar will still be the lowest cost source of energy, but they'll be a lot more expensive than they otherwise would be. Which means that as utilities are out there meeting the electric demand from their customers and having to build new generation, it's gonna be more expensive than it otherwise would've been. That will (have) a direct impact on utility customer costs, so utility rate payers across the country are going to see higher electricity bills than they otherwise would have because of the actions that Congress and President Trump took in July. And there's a variety of different estimates, but under some estimates we've seen ultimately there could be increases in what Coloradans are paying for energy of $300-$400 a year, so a significant impact.
Llanes: We've talked a lot about specific programs, but I'm wondering, kind of big picture here: how do all of these changes at the federal level impact CEO's ability to work with Coloradans and to administer your programs?
Toor: Yeah, so I think the way that I would describe it is that Colorado has a strong set of programs that are oriented towards both helping save people money on energy and clear the air and meet our state climate goals. And for a while there, until six months ago, I would say we really saw the federal government as a partner, and we were rowing in the same direction at the federal level and the state level. I think what we now see coming out of the federal government is chaos and uncertainty that certainly make it more difficult to serve Coloradans.
That said, I think we're very lucky to be in Colorado where we have a governor and a legislature that have been committed to clean energy and energy affordability. And we will certainly keep moving forward to meet our climate goals, move towards cleaner air, and continuing to give Coloradans options that allow them to save money, whether it's with an electric vehicle or an electric heat pump.
Llanes: That was Will Toor, the executive director of the Colorado Energy Office. Will, thank you so much for taking the time to talk with Rocky Mountain Community Radio.
Toor: Thank you very much.
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