South Dakota opts out of Inflation Reduction Act energy rebates

A handful of states have offered rebates to consumers who make their homes more energy efficient, months after New York became the first to do so in May.

Meanwhile, South Dakota officials in August rejected federal funding tied to two new programs created by the Inflation Reduction Act, a landmark climate law enacted in 2022.

IRA sets aside $8.8 billion for consumers through two plans Home Energy Rebates program.

Consumers can receive up to $8,000 Home Productivity Rebatesand up to $14,000 Home Electrification and Appliances Rebates.

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Together, the two rebate programs are designed to cover (or in some cases completely offset) the cost of remodeling a home and upgrading appliances to make them more energy efficient. Officials say such adjustments could help consumers cut utility bills while reducing carbon emissions that contribute to planet warming.

The two programs have different rules to determine which consumers qualify and how much money they can receive. In some cases, rebates will depend on household income and the home's overall energy reduction.

A spokesman for the U.S. Department of Energy said nearly every state has said it will introduce rebate programs for residents.

State officials have an August deadline to formally reject federal funding. They have a January 31, 2025 deadline Submit a program application to DOE.

South Dakota is the only state so far that has publicly said it will not implement tax rebates.

“We did investigate this in good faith,” said Jim Terwilliger, South Dakota's director of finance and administration. explain During July 30 appropriations hearings. “We just don't believe this is the right thing for South Dakota.”

States that administer federal funds have some leeway in designing programs. They must apply for funding and can issue rebates to consumers if their applications are approved.

New York launched the first phase of tax rebates on May 30.

Five others — Arizona, Maine, New Mexico, Rhode Island and Wisconsin — A rebate program has since been introducedAccording to data from the U.S. Department of Energy as of September 24.

“I expect more and more projects will be launched,” said Kara Saul-Rinaldi, president and CEO of AnnDyl Policy Group, a consulting firm specializing in climate and energy policy.

According to the U.S. Department of Energy, more states, as well as Washington, D.C., have submitted applications or have been approved: California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Michigan, Minnesota, New Jersey, Hampshire, Massachusetts, North Carolina, Oregon, Tennessee, Vermont, Washington and West Virginia.

The 26 states plus the District of Columbia have requested a total of $4 billion in funding so far, the U.S. Department of Energy said.

A Department of Energy spokesman said the rebate was a new program and “a complex government program like this takes time and coordination to establish.”

“The Inflation Reduction Act holds states responsible for designing and implementing home energy rebate programs that fit local needs,” a spokesperson wrote in an email. “Because each state has different resources and capabilities, each state’s Timetables will also vary.”

However, South Dakota officials said in August they would not participate, the only state so far to reject federal rebate funds.

“South Dakota will not be part of the push for a Green New Deal,” Ian Fury, a spokesman for Republican Gov. Kristi Noem, said in an emailed statement.

Each state has one Deadline August 16, 2024 Funds formally declined.

“We believe the administrative burden and expense of administering such a program would be inappropriate, and we generally disagree with the policy,” Terwilliger of the South Dakota Department of Finance and Administration said in a July report.

Inflation Reduction Act allows states to Use up to 20% its funds for administrative purposes.

The agency said 51 states and territories have applied to the Department of Energy for early administrative funding.

this $68.6 million Federal funds set aside for the South Dakota rebate will be reallocated among participating states.

Furry also pointed out that this is not the first time South Dakota has rejected federal spending. this is the only one Refuse to extend unemployment benefits Fury said during the 2020 Covid-19 pandemic.

The Green New Deal is a climate change policy initiative backed by congressional Democrats Around 2019. Bipartisan legislation creating energy rebate programs has existed almost a decade ago, e.g. Home Star Energy Renovation Act 2010.

Saul-Rinaldi said the concept of consumer rebates tied to energy efficiency “predates the Green New Deal by many years.”

Florida officials appear to have reversed their initial stance on the tax refund issue.

Republican Gov. Ron DeSantis in 2023 vetoed the state's authority to spend about $5 million in federal funds to administer the energy rebate program. At the time, a spokesperson for the state's Department of Agriculture and Consumer Services told CNBC that Florida would not be applying for a tax refund as a result.

Now, Florida Preparing According to relevant information, the rebate program is expected to be soft-launched at the end of 2024 and fully launched in early 2025. National website.

A spokesman for the Department of Agriculture and Consumer Services did not respond to a request for comment on the change in stance.

At a high level, consumers will be able to receive rebates at the point of sale when they purchase appliances directly from retailers or qualified contractors who help households complete efficiency projects.

“Each state is approaching (its plans) differently for a number of reasons,” Saul-Rinaldi said.

Many companies are rolling them out in phases. For example, New Mexico begins with Offering $1,600 rebate Available to low-income consumers purchasing insulation for single-family homes from participating retailers.

Similar to other states, qualifying New Mexico residents will later be able to receive additional rebates such as:

• $8,000 for an Energy Star-certified electric heat pump for space heating and cooling;
• Electrical panel $4,000;
• $2,500 for electrical wiring;
• $1,750 for an Energy Star certified electric heat pump water heater;
• Air sealing $1,600; and
• $840 for an Energy Star certified electric heat pump dryer and/or electric furnace.

Saul-Rinaldi said consumers and contractors should check their state energy department websites to learn more about their specific programs and eligibility.

The U.S. Department of Energy recommends that households do not wait to complete necessary home energy upgrades or projects if states have not yet formally introduced rebates. They may be eligible for other federal programs, “including tax creditthis Weatherproof Assistance Programand others State, local and utility programs,” the agency explain.