House Passes Direct-Pay Incentives for Co-ops; Bill Heads to Senate

The House has passed a sweeping spending package that includes direct-pay incentives for electric co-ops to develop new energy technologies. (Photo By: weible1980/Getty Images)

The House on Friday passed a $1.85 trillion spending package that includes direct federal payments for electric cooperatives to develop new energy resources and technologies, including renewable energy, battery storage projects, nuclear energy facilities and carbon capture.

The package still must be approved by the Senate.

“As electric co-ops work to reliably meet future energy needs at a cost that consumers can afford, they must have equal access to energy incentives and programs,” said NRECA CEO Jim Matheson.

The direct-pay provision would put co-ops on a level playing field with investor-owned utilities, which already receive federal tax breaks for providing power from solar, wind and other renewable energy sources and for investing in carbon capture.

The bill also provides direct-pay tax incentives for developing electric vehicle infrastructure, which a growing number of co-ops are pursuing.

Electric co-ops haven’t had comparable federal incentives because they are exempt from federal income taxes. NRECA has stressed that the Biden administration’s goals for reducing carbon dioxide emissions cannot be met without the participation of co-ops and municipal utilities, which together make up 30% of the electricity sector.

The legislation also includes $10 billion for a voluntary program in which the federal government provides grants and loans to co-ops that deploy renewable energy systems, energy efficiency or carbon capture, or retire their fossil-fuel power plants.

By retiring debt on fossil-fuel plants that are closing, the government would help ensure that co-ops aren’t stuck with stranded assets that they are still paying for after the facilities have shut down.

“The House bill would give co-ops access to direct-pay incentives for energy innovation and create a $10 billion program to support co-ops’ voluntary clean energy transition,” Matheson said. “This is appropriate recognition of the need to level the playing field for not-for-profit cooperatives, reduce costs and open new doors for innovation.”

Erin Kelly is a staff writer for NRECA.