Cantwell, Murray, Colleagues Introduce Bill to Boost Public Power Clean Energy
Bill extends to public utilities comparable clean-energy incentives available to for-profit utilities to unleash a wave of clean energy investment
WASHINGTON, DC – Today, U.S. Senators Maria Cantwell (D-WA), Patty Murray (D-WA), Ben Nelson (D-NE), and Bernie Sanders (I-VT) introduced legislation to extend incentives to public utilities for investing in clean energy that are comparable to those already available to for-profit utilities through the tax code. The Clean Renewable Energy Investment Act of 2010 seeks to create jobs and spur economic growth by removing the limit on the amount of tax credit bonds that consumer-owned public utilities can issue for clean and renewable energy projects.
“Public power providers are key contributors to our nation’s clean energy future, and their ratepayers should benefit from the same incentives as anyone else,” Senator Cantwell said. “Public power utilities serve half the people in Washington state and one in four nationally, yet the federal incentive available to public power is only one-tenth of that available to investor-owned utilities. This bill will unleash billions of dollars in clean energy investment and result in lower costs for consumers and the creation of thousands of green jobs nationwide.”
“The renewable energy industry has boosted local economies, expanded our energy supply, and created new clean energy jobs in our state,” Senator Murray said. “Lifting the cap on the CREBS program will help Washington state public power utilities invest in new renewable energy resources while reducing energy bills for families and small business owners.”
Clean Renewable Energy Bonds (CREBs) are bonds that pay investors tax credits instead of interest, which delivers an incentive to public power providers by lowering the cost of financing for renewable energy projects. The Clean Renewable Energy Investment Act removes the arbitrary cap on the amount of CREBs that can be issued by the nation’s consumer-owned public power providers and cooperative electric companies. This will level the playing field with investor-owned, for-profit utilities, which have been able to take advantage of tax incentive programs not available to tax-exempt public utilities. Uncapping CREBs will mean billions of dollars in additional clean energy investment that will create thousands of jobs nationwide and help reduce our nation’s dangerous overdependence on fossil fuels.
The Clean Renewable Energy Bonds program was created by Congress in 2005 to provide the not-for-profit, consumer-owned sector of the utility industry, with a federal incentive to invest in renewable power. In Washington state, public power utilities and rural electric coops have received over $500 million in bonding authority for the construction of 13 renewable energy projects since 2005. However, the program imposed an overall cap on the amount of CREB bonds that can be issued nationwide by public utilities. As a result, the incentives for consumer-owned utilities were never truly comparable to the tax incentive provided to for-profit, investor-owned utilities. Consumer-owned utilities operate on a non-profit basis, and because they incur no federal income tax liability, public utilities cannot take advantage of traditional production tax credits available to for-profit utilities.
In another provision important to Washington state, the Act clarifies that Tribal utilities can issue CREBs; makes technical modifications to the CREB program to make these bonds more consistent with other types of tax credit bonds; and enables consumer-owned utilities to develop and own renewable resources directly rather than through a third-party contract, ensuring that the full benefit of the federal incentive flows to electric consumers.
Public power and electric cooperative utilities have billions of dollars in projects on the drawing boards awaiting these incentives, and lifting the cap on clean energy bonds that public utilities can issue will spark a significant expansion of investment in clean and renewable energy. In the last round of CREBs, the demand for clean and renewable energy projects significantly exceeded the $800 million available for each category of issuer. Some even have the potential to use $800 million for a single project if given the opportunity.
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