5.4. ERMUSR 03-20-2007 - Laserfiche WebLink

Home Browse Search

~~ •.- ~ w'~~ t' American Public Power Association FEBRUARY 2007 Comparable Incentives for Public Power Development of Clean Resources *~~ There is strong and growing support for ina-eased energy production from renewable and ~~ clean energy resources. Congress has consistently provided privately-owned energy companies - with tax-code based incentives for such im~estments (i.e. the Section 45 production tax '~~ credit). Not-for-profit public power systems and rlaral electric cooperatives, which together serve 25 percent of America's electric consumers, have sought and will continue to seek, ~~ comparable incentives for this type of development. ~' The Renewable Energy Production Incentive (REPI) program was created in 1992 to provide a comparable incentive to produce renewable energy for these not-for-profit ~_ electric utilities, but it depends on annual appropriations and has never received sufficient funds to achieve this objective. Today, the demand for the program has far outpaced its funding. REPI has been and remains a valuable program, but it cannot meet the needs of all not-for-profit utilities seeking to promote the use of renewable energy. And the problem for these utilities is becoming more acute as states adopt renewable encr-gy portfolio standards *~ Congress sought to address this situation by enacting the Clean Renewable Energy Bond (GREW) program in the Energy Policy Act of 2005 (EPAct05). Under this program, public power systems and rural electric cooperatives have a financial incentive somewhat comparable to the production tax credit provided to for-profit companies. Combined with continued funding for REPI, the CREW program will enable a broader swath of the not-for- profit electricity sector to invest in these cleaner technologies. _ ~ ~ ~ Most cleaner and renewable generation resources are generally less mature technologies and `i~ therefore usually more expensive to construct and operate than traditional generation resources. The federal government has therefore recognized the need to pro~~ide incentives to encourage the construction of these facilities. Since consumer-owned utilities operate on a notfor-profit basis and incur no federal tax liability, traditional production tax credits simply do not work for them. Yet the nearly 3,000 public power utilities and rural electric cooperatives collectively serve 25 percent of the nation's electricity customers. 'T'hese utilities are often ideally situated in terms of both geography and size to integrate clean and renewable technologies into their systems. Many of these utilities enjoy a proximity to wind, landfill gas and other resources. Furthermore, the smaller size of many consumer-owned utilities makes renewable generation, which tends to be smaller in terms of electricity output, an attractive alternative to large-scale facilities such as nuclear and coal. In recent years, public power customers have increasingly demanded access to power from clean, renewable facilities. Beyond consumer demands, many states have set forth renewable portfolio standards (RPS) that apply to all utility sectors. Nonetheless, renewable resources (exclusive of hydropower) still account for less than two percent of the nation's overall www.APPAnet.org continued 29