Washington D.C., May 2, 2019—The American Public Power Association praised the Clean Energy for America Act introduced today by Senator Ron Wyden (D-OR) for ensuring that clean energy incentives can benefit all utility customers, including the 49 million Americans served by public power utilities. Currently, public power utilities are unable to use energy-related tax incentives due to their tax-exempt status.
“The Clean Energy for America Act ensures that all utilities can benefit from incentives intended to encourage investment in, and energy production from, clean energy resources,” said Association President and CEO Sue Kelly. “This is great news for public power utilities and the more than 49 million Americans they serve.”
Congress has provided financial incentives for investments in clean and renewable energy production primarily through income-tax credits. Likewise, public power utilities have a strong interest in broadening their portfolios by adding renewable energy resources.
However, as not-for-profit, tax-exempt entities, public power utilities cannot directly benefit from tax credit incentives. In modifying and extending tax credits for clean energy and clean fuels, the Clean Energy for America Act fixes this problem by providing a comparable incentive for public power utilities – the Clean Energy Bond (CEB).
Akin to a Clean Renewable Energy Bond (CREB), a CEB could be issued as either a tax credit or direct payment bond to finance clean energy projects. If issued as a tax credit bond, interest paid to CEB holders would be taxable, but the bondholder would receive a tax credit of up to 70 percent of the interest received. Alternatively, a CEB could be issued as a direct payment bond. Again, interest paid on the bond would be taxable to the bondholder, but the issuer—not the bondholder—would receive the tax credit in the form of a direct payment.
CEBs would not be subject to a volume cap—a handicap that substantially limited the effectiveness of CREBs. Also in contrast to CREBs and other direct payment bonds, CEB credit payments to issuers would not be subject to federal budget sequestration.
“The approach developed by Senator Wyden ensures that theses incentives will be delivered effectively and efficiently – to all customers,” said Kelly.