Legislative Issues

Issue

Electric cooperative efforts to maintain grid reliability and ensure public safety include keeping power line rights-of-way clear of hazardous trees and vegetation, even along lines that cross federal lands to provide affordable electricity to rural Americans. Proactive rights-of-way upkeep that includes vegetation management to ensure reliable delivery of electricity is a uniform utility industry practice adopted by electric co-ops across the country.

However, outdated and inconsistent federal land management policies make it more difficult and costly for electric co-ops to get approval for rights-of-way management to prevent power outages, protect human life and limit impacts to natural resources on or near federal property. Federal reforms are needed to cut red tape and make it easier for electric co-ops to manage vegetation to limit downed power lines, prevent catastrophic fires and respond to emergencies.

Background

To meet federal and state reliability standards, electric co-ops perform rights-of-way maintenance, including vegetation management, on their 2.5 million miles of lines, spanning 75% of our nation’s land mass. All electric utilities must comply with reliability, security and safety standards, even for the nearly 100,000 miles of distribution and transmission lines on federal forest land.

Because many electric co-ops extend service to the “last mile” for people in the most remote and rugged areas, co-op lines often cross federal lands managed by the U.S. Forest Service and the Bureau of Land Management (BLM). Therefore, Forest Service and BLM reviews are often required for co-ops to do routine power line maintenance and vegetation management – including removing a fallen tree, as well as system upgrades to improve reliability. Delays in application reviews and renewals can keep co-op projects on hold for several months to over a year and add tens of thousands of dollars in costs.

Such delays also create unnecessary liability risks for electric co-ops, which can be held responsible for damages if a hazardous tree or other vegetation comes into contact with a power line and causes a fire before the Forest Service or BLM give the co-op approval to address the problem. Forest Service and BLM efforts to address the lack of uniformity in their standards, review processes and decisions led to some improvements. However, these issues remain unresolved without a legislative remedy.

The Electricity Reliability and Forest Protection Act, introduced by Rep. Doug LaMalfa (R-CA) and Rep. Kurt Schrader (D-OR), includes reforms to streamline rights-of-way reviews and time limits for federal decision-makers to provide consistency, flexibility and accountability. It would also ensure utilities cannot be held liable for damages if the government fails to allow them to manage vegetation on a right-of-way or immediately adjacent area.

Electric Cooperatives of Arkansas Position

Electric Cooperatives of Arkansas Position. Electric co-ops urge Congress to pass legislation to reform federal land management practices in order to better ensure reliability and reduce the risk of fires and fire hazards on utility rights-of-way across federal lands. Streamlining federal government management practices on these federal lands will make it easier for electric co-ops to maintain safety and reliability by performing needed vegetation management to prevent threats to power lines and respond to emergencies. Urge your Members of Congress to cosponsor and pass the Electricity Reliability and Forest Protection Act to ensure grid reliability and consistent access to power line rights-of-way on federally-owned lands.

For more information call (501) 570-2263 or email Kirkley Thomas.

Issue

Electric cooperatives use a wide range of technologies to generate power, help consumers efficiently use that power, and maintain a resilient grid to deliver that power. As consumer-owned utilities, electric cooperatives work to keep energy costs affordable for member-consumers while keeping power reliable and safe. Various tax incentives for energy production help electric cooperatives keep that power affordable.

Status

Several bills have been introduced in the 115th Congress to advance the energy tax incentive priorities of electric cooperatives. Co-ops support extending and modifying tax incentives for geothermal energy sources, for nuclear power, and incentivizing carbon capture technologies to reduce emissions of CO2 from coal-based power plants.

Geothermal Heat Pump Tax Credits

Many electric cooperatives promote the use of ground-source (geothermal) heat pumps for heating and cooling. This energy source is highly efficient and saves consumers money on their heating and cooling bills. However, the up-front cost of installing a geothermal energy system is prohibitive for many. Tax Credits to help reduce the initial cost for installing residential (Section 25D) and commercial (Section 48) geothermal systems expired at the end of 2016.

In 2015, Congress extended and provided a phase-down of tax credits for wind and solar technologies. However, the tax credit for geothermal heat pumps (along with small wind and combined heat and power property) was left out of the year-end package, despite being in the same section of the tax code. Geothermal technologies need to be treated similarly to wind and solar technologies.

Representative Tom Reed (R-NY) introduced H.R. 1090 in February 2017, to extend and phase out the tax incentive for geothermal and other technologies in a manner similar to the treatment provided for solar and wind technologies by Congress in 2015.

Nuclear Production Tax Credit

Congressional action is needed to modify current production tax credits (PTCs) established by the Energy Policy Act of 2005 for advanced nuclear power plants. Current law limits the PTC to the first 6,000 MW of new capacity placed in service by 2020. Additionally, current law creates inequities among nuclear project participants, allowing Investor Owned Utilities (IOUs) to utilize tax credits, while co-ops and municipal utilities with significant investments are not able to realize cost savings in the same manner.

In South Carolina and Georgia, the first new nuclear plants to be built in more than 30 years are under construction. These four advanced technology nuclear units are joint venture partnerships, which were not contemplated by Congress in the 2005 law. In both states, the nuclear construction project includes not-for-profit co-owners. While the Treasury Department allocates PTCs to all partners on a pro-rata ownership basis, the not-for-profit cooperative and municipal entities cannot directly utilize the credits because they are exempt from federal income taxes.

Representative Tom Rice (R-SC) and Sen. Tim Scott (R-SC) have introduced legislation (H.R. 1551 and S. 666 respectively) to modify the current Nuclear Production Tax Credit to treat not-for-profit nuclear project co-owners more fairly by allowing them to more easily monetize their allocated tax credits to provide an incentive comparable to their for-profit partners. It also removes the 2020 placed-in-service date, while maintaining the limit on the use of the PTC to the first 6,000 MW of new advanced nuclear generation.

Carbon Capture Tax Credits

Electric cooperatives have supported research into new technologies to reduce emissions from our nation’s fossil fuel-based power plants with significant results. Emissions of SO2, NOx, Particulate Matter, and other emissions have been reduced dramatically due to technological innovations. However, there is no commercially-available, cost-effective technology to reduce emissions of CO2.

The current tax credit (Section 45Q) geared toward incentivizing technology development to reduce CO2 emissions is one form of federal support, but it needs updating. The current Section 45Q tax credit is restrictive and does not meet the needs of the entities that are best positioned to utilize it, including utilities that want to maintain and use coal as part of their energy portfolio. Rep. Mike Conaway (R-TX) and Sen. Heidi Heitkamp (D-ND) introduced legislation to update the Section 45Q tax credit in the 114th Congress and are preparing to introduce similar legislation in the 115th Congress.

Electric Cooperatives of Arkansas Position

• Ask your Representative to co-sponsor H.R. 1090, the Technologies for Energy Security Act, which provides tax parity for geothermal heat pumps and other technologies
• Ask your Representative and Senators to co-sponsor H.R. 1551 or S. 666 to allow cooperative members to realize the same benefits as IOU ratepayers when co-ops are partnering with IOUs in developing nuclear power plants
• Ask your Representative and Senators to support legislation to spur commercial deployment of carbon capture and storage technology to make the current tax credit permanent, increase its value, and make it available to not-for-profit electric cooperatives

For more information call (501) 570-2263 or email Kirkley Thomas.

Issue

When it was originally enacted in 1973, the authors of the Endangered Species Act (ESA) envisioned a law to protect species believed to be on the brink of extinction. At that time, 109 species were listed for protection. Today, there are nearly 2,000 species that are designated as either threatened or endangered under the ESA, with an additional 250 species considered as “Candidates” for listing.

Once a species is listed, ESA compliance can seriously impact the ability of electric cooperatives to site and maintain power lines. When a protected species or its habitat is adversely affected by an activity such as building transmission lines, it is a “taking” which will require an incidental take permit and a habitat conservation plan. Therefore, ESA listings can adversely affect essential economic activities in parts of rural America. Also, the ESA has been among the most contentious environmental laws because its substantive provisions can affect the use of both federal and non-federal lands and resources.

Electric cooperatives seek to make the ESA more efficient, effective, and less costly, with the goal of finding a balance that accommodates essential economic activities. To ensure fair and sensible application of the Act, scientific information must be thorough, balanced and based on scientific standards and impartial peer review. As true stewards of the land, electric cooperatives support solutions that balance economic growth and the preservation of native species.

Status

While numerous species-specific legislative efforts have been attempted to remedy challenges posed by individual species in certain regions of the country, Congress has not pursued broad reform of the ESA law in a number of years. The House of Representatives has taken up narrow legislation in recent years to promote transparency in listing decisions and track and cap attorneys’ fees for cases filed under the ESA. However, this legislation was not considered in the Senate.

House Natural Resources Committee Chairman Rob Bishop (R-UT) and Senate Environment and Public Works Committee Chairman John Barrasso (R-WY) have both expressed interest in reviewing and modernizing the ESA. NRECA will work closely with Chairman Bishop, Chairman Barrasso and other congressional leaders to advance the cause of much needed ESA reform.

Electric Cooperatives of Arkansas Position

NRECA supports congressional efforts to review, update and modernize the Endangered Species Act for the 21st Century.

Additionally, NRECA supports legislation similar to the modest effort from 2014 that would require greater transparency and reduce incentives for abuse of the ESA law by:

• Requiring data used by federal agencies for ESA listing decisions be made publicly available on the Internet;
• Requiring annual reporting and tracking of ESA litigation costs, including attorneys’ fees;
• Requiring the federal government to disclose to affected states all data used prior to a listing or proposed ESA listing decision; and
• Capping hourly fees paid to attorneys that prevail in cases filed under ESA

For more information call (501) 570-2263 or email Kirkley Thomas.

Issue

Congress should maintain the cooperative exemption from the federal pole attachment statute and reject any effort to subject electric cooperatives to federal pole attachment regulations.

Background

Electric Cooperative poles are designed and constructed for a specific purpose – to carry electrical wires and related equipment. Because working on or near energized electrical lines and equipment is inherently hazardous, safety codes and regulations govern the way overhead lines and poles are designed, constructed, installed, and maintained in order to protect utility workers and the general public. These same safety rules specify the placement of other equipment on poles such as telecommunications or cable equipment. This is because any foreign attachment departs from the design and construction of the original overhead line and may introduce significant engineering and safety issues which must be considered. This includes reliability issues because the attachments increase wind and ice loading, increasing the susceptibility to breakdowns during extreme weather events. In some cases, the addition of foreign attachments may necessitate installation of taller or stronger poles or call for relocation of poles, increasing costs to the electric cooperative members.

In 1978, Congress acted to speed deployment of cable television service. Among other initiatives, Congress provided for federal regulation of pole attachments. The FCC was granted jurisdiction over rates, terms and conditions for cable lines attached to investor-owned utilities’ poles unless a state chose to regulate pole attachments. Recognizing the unique, locally-directed governance of electric cooperatives, Congress exempted electric cooperatives from the pole attachment provisions and maintained that exemption in the 1996 reauthorization of the Telecommunications Act.

In the 1978 statute and the 1996 Act, Congress specifically allowed state pre-emption of federal regulation where states certify to the FCC that they regulate rates, terms and conditions for pole attachments. Twenty states and the District of Columbia have exercised this right to regulate pole attachments and some of these states oversee electric cooperatives’ pole attachments.

During debates on the 1978 Pole Attachment statute, Congress clearly expressed an interest in preserving a balance of state vs. federal authority, stating, “The Committee considers the matter of Cable TV (CATV) pole attachments to be essentially local in nature, and that the various state and local regulatory bodies which regulate other practices of telephone and electric utilities are better equipped to regulate CATV pole attachments…. It is only because such state or local regulation currently does not widely exist that federal supplemental regulation is justified.” Today, large telecommunications and broadband providers continue to push Congress to authorize a Federal one-size-fits-all regulation plan for pole attachments by making the argument that inconsistent pole attachment policy is a barrier to broadband deployment.

In 1978, Congress recognized the cooperative difference when it stated that “cooperatively owned utilities, by and large, are located in rural areas where often over-the-air television service is poor. Thus customers of these utilities have an added incentive to foster the growth of cable television in their areas … pole rates charged by municipally-owned and cooperative utilities are already subject to a decision-making process based on constituent needs and interest.” Today’s electric cooperatives are similarly motivated by their consumers’ desire for robust broadband and other advanced telecommunications services.

In order to maintain 501(c)(12) cooperative tax-exempt status, cooperatives charge cost-based rates for their services, including pole attachments. Some costs are difficult to identify and quantify, especially operational or safety issues that improper pole attachments may cause. If a federal uniform rate pushed attachment rates lower than actual costs, member-owners of the not-for-profit electric co-op would wind up subsidizing cable, broadband, and telecommunications corporations, many of which are for-profit entities.

Electric cooperative boards are responsible for maintaining the integrity of the cooperatives’ distribution lines and poles. Local regulation of pole attachments ensures that cooperative boards and management can facilitate the deployment of cable, telecommunications and broadband services while protecting the critical infrastructure that brings essential power to homes and businesses.

Electric cooperatives have an additional incentive today to support the expansion of broadband and other advanced telecommunications capabilities in their communities with reasonable pole attachment rates and access procedures. Cooperatives require increasingly robust communications networks to support smart grid technologies that enhance the efficiency and reliability of electric service. In addition, electric cooperatives recognize the need that their consumer owners have for access to broadband in their service territories.

Electric Cooperatives of Arkansas Position

We urge Congress to maintain the federal pole attachment exemption for electric cooperatives and reject all attempts to subject electric cooperatives to federal regulation of pole attachments.

For more information call (501) 570-2263 or email Kirkley Thomas.

Background

The Power Marketing Administrations (PMAs) are federal agencies, housed within the U.S. Department of Energy (DOE), with the responsibility to market electric power, primarily from multiple-purpose water projects operated by the Bureau of Reclamation and the U.S. Army Corps of Engineers. The four federal PMAs - the Bonneville Power Administration (BPA), the Southeastern Power Administration (SEPA), the Southwestern Power Administration (SWPA) and the Western Area Power Administration (WAPA) - are important sources of power for rural electric cooperatives who were some of the first purchasers of federal hydropower. Today, more than 600 rural electric cooperatives in 34 states are PMA power customers. For this reason, NRECA is focused on ensuring that our nation’s federal hydropower infrastructure and the PMAs remain a vital part of America’s energy backbone.

The PMAs are unique entities spanning geographically diverse regions of the nation. They have differing authorizing statutes, many of which have been layered over time as new projects were constructed. Since each PMA region is unique, PMAs have been statutorily headquartered in the geographic areas in which they serve rather than Washington, D.C. This is why federal customers and the electric consumers they serve favor regional decision making as opposed to “top-down” management from Washington, D.C.

In addition to PMAs being regionally based, another key feature of the federal power program is that it pays its own way. Unlike most other federal programs, appropriations for the federal power program are repaid to the U.S. Treasury by federal power customers with interest. Historically, deficit reduction measures have sought to curtail appropriations for the federal power program, despite the fact that all of the costs are repaid. These curtailments threaten the reliability and efficiency of federal hydropower assets. The federal power customers, in partnership with the PMAs and generating agencies, have historically contributed supplemental funds to reduce the effect of funding shortfalls with the realization that continued federal appropriations must remain the primary support for sustaining the federal power program. Federal power customers are open to alternative funding mechanisms to complement appropriations, however, customer financing tools must be tailored to meet unique regional needs and consistent with the “beneficiary pays” principle of assigning costs based directly on benefits received.

By working together, Congress, the Administration, and the federal power customers can address the needs of the federal hydropower resource and the PMAs, and maximize the benefit of the system for all.

Issue: Potential for Administrative Initiatives that Conflict with PMAs' Statutory Mission

In the past, DOE has suggested and even proposed that the PMA structure should be revisited and overhauled in attempts to use the PMAs to implement energy policies that are outside of their statutory mission. Such past proposals included, among other things: increasing preference customer costs in order to promote the development of non-hydro, intermittent renewable energy resources; altering the PMAs’ rate structures to incentivize programs for energy efficiency, demand response, and electric vehicle deployment; and encouraging PMA participation in the development of an energy imbalance market (EIM) – a FERC-regulated entity that would feature a bid-based market (as opposed to cost of service rates) that could be a precursor to a regional transmission organization (RTO) in the West.

Electric Cooperatives of Arkansas Position

Changes to existing policies contemplated by DOE that affect PMA governance and the federal power program as a whole should be made only after a full and open public process with opportunities for PMA customers to provide meaningful input. Furthermore, any new agency guidance must be consistent with three simple principles: affordability; fairness; and upholding the core statutory missions of the PMAs.

Affordability

As not-for-profit entities, electric cooperatives provide the most affordable and reliable electricity possible to their consumer-members. Simply put, every time the input costs increase for a co-op, electric bills must also increase to make up the difference. If policy changes are made that increase the costs of PMA-marketed electricity, customer rates will also increase.

Fairness

The federal transmission system the PMAs use to market power is paid for through rates charged to users and beneficiaries of the system. NRECA supports the construction of new transmission infrastructure – including poles, wires, computers, people, and other components – where it makes sense. However, these investments should be made to improve system performance and reliability, not to give one type of generator or customer an advantage. The cost of capital improvements should be borne by the beneficiaries. This long-standing practice of assigning costs based on benefits received should be maintained (aka the “beneficiary pays” principle).

Upholding the PMAs' Core Statutory Mission

While agency directives to compel the PMAs to become involved in a wide range of businesses including advancing electric vehicle deployment and energy efficiency may be valid policy goals, directing ratepayers and taxpayers to foot the bill for these pursuits is well outside of the PMAs’ statutory mission. NRECA believes it is bad public policy, and sets a poor precedent to use the PMAs as technology policy laboratories, ignoring their primary mission of marketing federal hydropower.

For more information call (501) 570-2263 or email Kirkley Thomas.

The Low Income Home Energy Assistance Program (LIHEAP) provides critical home heating and cooling help to millions of vulnerable American families. LIHEAP funding peaked when Congress appropriated $5.1 billion for the program in Fiscal Year (FY) 09 and FY10. Since then, funding has fallen by more than one-third to $3.39 Billion in FY16. As a result of these cuts, more than one million fewer eligible households receive energy assistance, and average individual grants have been reduced. The most recent budget proposed by President Trump would eliminate all funding for LIHEAP.

Why Protect LIHEAP Funding?

America’s Electric Cooperatives serve 93% of the persistent poverty counties in the country and we need to keep this important tool in the tool chest so that we can continue to help our most vulnerable consumer owners in times of crisis.

LIHEAP Makes The Difference

A 2016 study from the Federal Reserve found that nearly half of American families would struggle to pay for an emergency expense costing $400. LIHEAP frequently meets those exact short-term emergencies and can be the difference between making ends meet or not.

The Need For LIHEAP Remains High

In 2015, the national poverty rate was 13.5%, and 43.1 million Americans lived in poverty. These numbers remain above pre-recession levels. LIHEAP Prioritizes Vulnerable Households: According to HHS data, more than 70% of LIHEAP recipient households had at least one vulnerable person – a senior age 60 or older, a child age 5 and under, or an individual with a disability.

LIHEAP Is Not An Entitlement

Unlike entitlement programs that receive funding based on changes in the eligible population, LIHEAP is funded by the annual Congressional appropriations process. While states set eligibility rules, federal law sets the income maximum at 150% of the federal poverty guideline or 60% of a state’s median income. For example, 150% of the FY17 poverty guideline for a family of 3 is $30,240. Most LIHEAP recipients earn much less than the maximum thresholds: the most recent data show that a typical LIHEAP recipient household had a median income of 83.5% of the federal poverty guideline.

Electric Cooperatives of Arkansas Position

Congress should appropriate at least $3.39 Billion in FY 2018 funding for the LIHEAP. Congress faces very difficult fiscal challenges and tough budget decisions will need to be made. However, cutting LIHEAP funding is not the answer, and will deny people heating and cooling, which are basic needs for survival.

For more information call (501) 570-2263 or email Kirkley Thomas.