Powering Strong Communities

APPA’s Joy Ditto Details How Public Power Will Benefit From Inflation Reduction Act

Joy Ditto, President and CEO of the American Public Power Association (APPA), recently detailed how public power utilities are poised to benefit from the recently enacted Inflation Reduction Act (IRA).

President Biden on Aug. 16 signed into law the IRA, which will extend and expand various energy tax incentives and give public power utilities direct access to such credits through a refundable direct payment tax credit.

“We’ve been working on this for over twenty years,” said Ditto on a recent episode of White House Chronicle, which is hosted by Llewellyn King.

Since the 1992 Energy Policy Act, “we’ve been looking at this idea of parity or comparability in the tax code for publicly-owned utilities, for other not-for-profit utilities like rural co-ops so that we can really be unleashed in the marketplace as we continue to drive toward a cleaner energy future,” she said.

The mechanism in the IRA, a refundable direct pay credit, “allows us to take advantage of these tax credits that have been available to our for-profit brethren for many years both in the form of an investment tax credit and a production tax credit.”

In the short term, “we first have to get implementation through Treasury, through the Internal Revenue Service,” she noted.

“We will need to work” with the Treasury Department “to make sure that this is implemented correctly.” She said that there is already good precedent in current tax rules and regulations for many of the elements it will take for implementation.

Ditto noted, for example, while state and local entities do not file annual income tax returns, Treasury does already have a mechanism in place for them to claim a refund of federal gasoline excise taxes, from which they are exempt.  “We’re hopeful that IRS and Treasury” will use some of those precedents to implement this, she said.

The congressional Joint Committee on Taxation valued these tax credits at $22 billion a year, so “this means billions of dollars in incentives for us going forward,” she said.

Noting that she has spoken with several APPA members in recent weeks, Ditto said that “they are excited, ready to move on some of these projects that maybe they’ve been holding off on.” In the longer term, “You’re going to see a variety of projects come online in the public power side.”

APPA on September 27 from 2-3 p.m. EDT will host a one-hour webinar “Public Power and the Energy Tax Provisions of the Inflation Reduction Act.”

Registration is free and only open to APPA utility members (including joint action agencies and state associations).

More information about the webinar, including a link to register can be found here.