Bonds and Financing

Long live the infrastructure #BuiltByBonds

Think about the electric grid - transmission and distribution equipment spanning the entire country and carrying electricity across rivers, mountains, and highways right into our businesses and homes, making commerce possible and communities livable.

"Scores of times each day, with the merest flick of a finger, each one of us taps into vast sources of energy … transformed into electricity, the workhorse of the modern world," the National Academy of Engineering said, calling the electric grid one of the greatest engineering achievements of the 20th century.

The grid has been doing its job for more than a century. That's a long time and some parts are showing their age, while others need to be upgraded just to keep pace with evolving technology. Still, the system is resilient and robust. For example, in 2015 the U.S. was hit by 24 major winter storms and more than 1,000 tornadoes, but all utility customers on average lost power for roughly 243 minutes the entire year - and public power customers for just 125 minutes in the year - according to data from the Energy Information Administration.

Could we do better? Absolutely, and we are taking steps to do so, like investing in new generation and advocating for cost-effective transmission planning.

Our industry faces new threats every day. We must prepare the grid for attacks, both cyber and physical. And we are. We're working to improve collaboration between the industry and the government and helping to create a network of mutual assistance for cyber attacks. Read more about the state of cybersecurity.

Resilience is about a lot more than security - it's about technology and innovation that responds to customer needs. We've even seen an upward trend in transmission and substation investment in recent years - investments like smart meters, distribution automation, outage management systems, synchrophasors, and new generation portfolios.

New generation portfolios and distributed generation require the grid to keep evolving. In states where renewable power investments are mandated, infrastructure plays a key role. All of this comes with a cost. We in public power are frugal for sure - doing the most with the least, being as economically and technologically efficient as we can. But we also know that the best way to keep a system running well is to maintain it by prudently investing into the infrastructure.

Public power utilities are committed to continually upgrade the infrastructure, but we need to ensure that the means of financing these investments is not taken away from us.

For some time now, the American Public Power Association has been on high alert about tax reform, and in particular, maintaining the tax-exempt status of municipal bonds - the primary tool our public power utility members use to finance new infrastructure.

Eliminating or undercutting the tax-exempt status of these bonds would increase our borrowing costs, and that will be reflected in electric rates, which are paid by everyone, regardless of income level. In effect, it is a regressive tax. And we are not alone - water systems, roads, schools, airports, you name it - are built by state and local governments using tax-exempt bonds.

President Donald Trump wants to see tax reform, but he is also pushing for infrastructure development, which, of course, costs money. For our part, we on staff met with the Trump campaign and the transition team on our priority issues, tax reform being number one. We will continue our outreach to the administration and to Congress. We have explained to Trump's energy advisors the tie between supporting energy infrastructure and protecting the tax-exempt financing we use to construct that infrastructure - a connection they had not previously made.

We'll keep up the fight in Washington but we need all of you, our members, on the barricades. We need you to talk to your elected officials about the importance of preserving tax-exempt bonds. And we need you to share stories about your existing bond-funded infrastructure projects on your social media and with us - if you're willing to participate, email us at [email protected].

The grid is great, and together we can make it stronger.