Contact Tobias Sellier, Senior Director of Media Relations and Communications at TSellier@PublicPower.org or 202-467-2927
Washington D.C., April 4, 2023 — The American Public Power Association appreciates the Treasury Department’s release of guidance today on energy communities. APPA continues to review the guidance, but key aspects appear to provide clarity and reliability where needed. In turn, the energy community provision is a key element of the Inflation Reduction Act (IRA) and could provide substantial benefits to public power utilities, which serve customers in every state (except Hawaii), as they transition to clean technologies.
In addition to extending and expanding a variety of critical energy tax incentives, the IRA created a refundable direct pay mechanism to ensure that all utilities can benefit from these incentives, including bonus credits for projects sited in energy communities. Without such a mechanism, public power utilities and electric cooperative utilities — which both operate as non-profit, tax-exempt entities — would be effectively blocked from owning tax creditable energy projects. These utilities collectively serve nearly 30 percent of U.S. customers, so allowing them to benefit from energy tax provisions for projects they own makes these tax incentives more effective, while also ensuring that no communities — including energy communities — are left behind.
Since the IRA’s enactment, APPA has asked that implementing guidance be clear, simple, and certain. For example, today’s guidance allows a safe harbor for entities which qualify as energy communities when project construction begins. This is a step in the right direction, which APPA appreciates. We will continue to review today’s guidance, but again appreciate the work being done here by the Treasury Department, Internal Revenue Service, and Department of Energy.