Contact Tobias Sellier, Senior Director of Media Relations and Communications at MediaRelations@PublicPower.org or 202-467-2927
Washington, D.C., February 12, 2025 — The American Public Power Association is greatly supportive of the re-introduction today of H.R. 1255, the Investing in Our Communities Act, legislation that will enable public power utilities to better manage the debt they use to finance critical infrastructure investments.
The issue is whether a public power utility, and other state and local borrowers, must issue taxable debt to refinance tax-exempt debt. Until 2017, the Tax Code allowed one tax-exempt advance refunding for each municipal bond. From 2013 to 2017 alone, advance refundings generated an estimated $14.3 billion in savings for state and local governments. However, this was changed in 2017 to raise revenue for the federal government, but at a far greater cost to state and local borrowers, including public power utilities.
The Investing in Our Communities Act would again allow one tax-exempt advance refunding. This will reduce financing costs when possible, but also help borrowers better manage their debt portfolios. All of which benefit the customers they serve.
“This legislation will reduce costs and increase flexibility in financing the investments that keep the lights on in our communities,” said APPA President & CEO Scott Corwin. “This is an important improvement to an already potent tool: the tax-exempt municipal bond. Bonds finance more than three-quarters of the nation’s core infrastructure. They reduce costs for borrowers and are an incredibly valuable investment for millions of Americans, many of whom are fixed-income seniors.”
Public power utilities use tax-exempt municipal bonds as an efficient financing tool. These bonds will save public power utilities an estimated $21 billion in borrowing costs over the next decade on investments in power generation, distribution, reliability, demand control, efficiency, and emissions control.
