As the budget reconciliation process churns its way through Congress, publicly owned power companies are moving forward with plans for tapping the elective pay program that turns tax credits into cash, a system that's helping usher in a new age for nuclear power.
"Probably the biggest item affected will be existing nuclear facilities," said John Godfrey, senior government relations director, American Public Power Association.
"You can claim the existing nuclear tax credit using elective pay. We own about eight gigawatts of nuclear power that we'll eventually get up and running."
Elective pay, also known as direct pay, was made available to non-profit entities via the Inflation Reduction Act. The program allows bond issuers, including public power companies, to claim green energy tax credits on tax forms and convert them into cash payments.
Publicly owned power companies and rural electric co-ops combined produce about 30% of the nation's electricity. The APPA was instrumental in turning the legislation into a workable system and has just rolled out new guidance for putting it to work
"Energy tax credits via elective payment represent a sea change in terms of how public power communities affordably finance infrastructure products," said American Public Power Association president & CEO Scott Corwin. "This Blueprint is essentially a manual for using this powerful new tool."
The APPA's
As green energy provisions of the IRA and the Bipartisan Infrastructure Act come under fire from the Trump administration questions arise about the future of elective pay.
"Congress and the President absolutely have the right and responsibility, to develop policies," said Godfrey. "Elective pay just ensures that those policies are fair and efficient."
The public side of the power industry tends to thrive in smaller markets where investor-owned utilities struggle to make a profit.
"We've got utilities in Indiana, Arizona, Nebraska, and Texas," said Godfrey. "If they develop projects using elective pay, they will save millions of dollars, and those savings will flow directly back to their customers, not to Wall Street."
Godfrey is getting positive signs that powerful allies on the House Ways and Means Committee are leaning towards keeping the program in place.
"Chairman (Jason) Smith has said he's extremely concerned about rural America where communities with elective pay will be able to develop these projects," said Godfrey.
"It's not our choice about what is going to be incentivized, but if you're going to do it, let's make sure that it's available to everybody."
The
Earlier this year the NLC helped coordinate a
Per the letter, "For the first time, state and local governments, as well as essential nonprofit community organizations – such as houses of worship, hospitals, and schools – can access the same clean energy tax credits as the private sector through elective pay.
"After one year of direct pay implementation, over 1,200 organizations, including over 500 state and local governments, are already accessing these incentives."
