Tax-exempt municipal bonds allow LPPC members to provide electricity, fuel and supplies that keep energy prices stable for their consumers.

BUILDING, OPERATING AND INVESTING IN INFRASTRUCTURE from LPPC Power on Vimeo.

Principle: RETAIN, RESTORE AND ENHANCE TAX-
EXEMPT FINANCING (TEF) TOOLS

Retain, Restore and Enhance Key Public Finance Tools

As the Administration and Congress follow-up on the “Tax Cuts and Jobs Act of 2017,” it is imperative that tax-exempt financing (i.e.,the exclusion of interest on state and municipal bonds from taxable income) continues to be preserved. Any future tax legislation should also restore the ability to issue tax-exempt advance refunding bonds. Advance refunding is an important tool for municipal utilities to lower borrowing costs associated with infrastructure development, which results in lower electric rates in the communities that we serve. Additional financing tools (i.e., direct pay bonds not subject to sequestration) and comparability on energy tax incentives will also be pursued.

Principle: UPDATE PRIVATE USE RESTRICTIONS

Eliminate Undue Restrictions on Use of Tax-exempt Financing for Public Power Infrastructure Investment

Restrictions in section 141(b) of the Internal Revenue Code concerning “private use” are outdated. The Treasury Department and Congress should update the tax code and regulations addressing private use restrictions to remove unnecessarily restrictive limitations on the use of tax-exempt financing for public power infrastructure investment. Outdated private use restrictions constrain the manner in which public power systems conduct their operations. As the Administration and Congress address tax issues, LPPC will seek to reduce all counterproductive limitations on public power financing.

Principle: ELIGIBILITY FOR INFRASTRUCTURE SUPPORT

Publicly Owned Grid Infrastructure Should Be Covered By Any Federal Infrastructure Investment Program

As federal policies to support infrastructure investment are considered, it is critical they include investment in publicly owned electricity grid facilities. Like publicly owned transportation, water, and wastewater systems, the nation’s electricity infrastructure is essential to the efficient operation of the economy. Federal funding, financing, or incentives for infrastructure should be available to support electric infrastructure investments by public power utilities.

Principle: REPEAL MANDATORY SEQUESTRATION FOR BUILD AMERICA BONDS (NEW FOR 2020)

Direct Pay Bonds Can Be An Effective Financing Tool for Public Power, but Must Be Exempt from After-the-Fact Mandatory Sequestration On a Going Forward Basis 

Build America Bonds (“BABs”) are taxable bonds on which the Federal Government reimburses the issuer for a portion of the interest paid. Although BABs were effective in helping finance public infrastructure projects at lower borrowing costs, the ability to issue BABs expired in 2010. In addition, the subsidy payments on existing bonds have been negatively impacted by across-the-board-cuts – sequestration – that went into effect on March 1, 2013. LPPC urges repealing sequestration of payments for existing BABs on a going forward basis and supports the reinstatement of BABs (or other direct pay bond programs) to support infrastructure investment without exposure to future sequestration.

Principle: ALLOW FLEXIBILITY IN OPTIMIZING RESOURCE PLANNING

Public Power Utilities Undertake Careful Generation and Transmission Resource Planning to Ensure Reliability, Affordability, and Environmental Stewardship 

States and utilities should have flexibility in resource planning to achieve cost-effective portfolios that meet planning objectives on a “best-fit” basis. This approach will ensure consideration for regional and market differences, resource and infrastructure availability, and the optimal combination of resource attributes and system performance.

Principle: STREAMLINE PERMITTING 

Permitting for Energy Infrastructure Should Be Streamlined 

Necessary energy infrastructure development too often runs into bureaucratic obstacles. Federal and state regulators and land agencies should provide for efficient review of applications related to energy infrastructure projects, consistent with the Administration’s priority on energy infrastructure development. Inter-agency coordination in federal permitting is critical, as is effective federal-state collaboration. Such coordination is also critical in relicensing of existing facilities, such as hydroelectric facilities.