FOR IMMEDIATE RELEASE
DATE: June 22, 2021
Phone: 515-362-7699 (o), 515-657-2607 (c)
DES MOINES - Electric generation and transmission cooperatives working to boost their use of wind and solar energy need direct-pay incentives from the federal government to put them on a level playing field with for-profit utilities that receive federal tax breaks, Bill Cherrier, CEO of Central Iowa Power Cooperative (CIPCO) told a Senate subcommittee Tuesday.
CIPCO has continued to diversify its generation assets over the past decade to ensure safe, reliable, and cost-effective power for its member systems. However, not-for-profit cooperatives and municipals are at a disadvantage for building and operating wind and solar projects due to the current federal structure of tax incentives.
“It’s important for policymakers to note that the current federal tax-credit structure prevents not-for-profit electric cooperatives like CIPCO from taking advantage of the tax benefit to directly build and own wind and solar generation assets,” he told members of the Senate Agriculture Subcommittee on Rural Development and Energy.
“This requires cooperatives to work with third-party providers on long-term contracts to bring this energy onto the system to benefit our member systems and those served at the end of the line. This unworkable incentive structure impedes the ability of cooperatives to adopt new technologies in a cost-effective way.”
He also urged senators to pass the Flexible Financing for Rural America Act, which the National Rural Electric Cooperative Association (NRECA) has estimated would save co-ops more than $10 billion by allowing them to refinance their federal loans at current low interest rates without penalty.
The Rural Utilities Service (RUS) is a key partner for long-term success for CIPCO and cooperatives across the country. Over the last 30 years, RUS has supported CIPCO with more than $500 million in secured, long-term financing.
“Recently, low interest rates have allowed utilities with commercial loans to refinance to lower interest rates, providing needed savings, particularly during the pandemic,” he said. “Unfortunately, this is not a current option with RUS loans.”
CIPCO would save more than $21 million with refinancing of its RUS loans, Cherrier said.
“As a not-for-profit electric utility, the interest savings would assist with rate stability, support additional infrastructure improvements and growth, and ultimately could be returned to members as additional patronage,” he said. “Investments we make today will continue grid viability and system success into the future.”
About Central Iowa Power Cooperative - CIPCO is a generation and transmission electric cooperative owned by member cooperatives and the communities they serve. With a balanced, 24/7 energy portfolio, CIPCO is committed to providing cost-effective, safe, and reliable energy. CIPCO and its 13 members serve over 300,000 Iowans in 58 Iowa counties. CIPCO’s offices are located in Des Moines, Cedar Rapids, Creston, and Wilton, Iowa. For more information visit www.cipco.net.