Press Release

American Public Power Association Applauds GREEN Act for Fairer Energy Incentives

Washington, D.C., November 19, 2019 – The American Public Power Association today applauded the Growing Renewable Energy and Efficiency Now (GREEN) Act for ensuring that all utilities can benefit from incentives intended to encourage critical energy investments.

“Allowing public power utilities to directly benefit from energy tax incentives makes those incentives more effective and more fair,” said Delia Patterson, the Association’s general counsel and senior vice president, advocacy and communications.

Federal tax expenditures are the primary tool Congress uses to incentivize energy-related investments. However, such incentives do not work for tax-exempt entities (including public power utilities). That explains why tax-exempt entities – which serve nearly 30 percent of the nation’s retail electric power customers – own less than 3 percent of the nation’s non-hydropower renewable energy generating capacity.

Public power utilities would like to own such assets, but given the current tax credit regime, the only economic way to access these resources is through power purchase agreements with merchant generators, which own more than 80 percent of the nation’s non-hydropower renewable energy generating capacity. While some of the value of tax credits flow through to public power customers in the form of lower rates, the Association estimates about half of the value is retained by merchant generators to pass back to their investors. This is both inefficient and unfair.

While details of the bill are still emerging, it is our understanding that the GREEN Act addresses this problem by allowing for the direct payment of energy production and investment tax credits to whatever entity owns the project. For public power utilities, this would mean that none of the value of these credits would be diverted to outside investors. Instead, the full value would directly benefit our customers. This will make these tax credits both more effective and more fair.