MRES prepares federal position papers

Each year MRES prepares position papers to inform and educate federal congressional members and their staff about public power issues. Here is a brief rundown of this year’s position papers that the MRES board of directors finalized during its January meeting.

Municipal tax issues

Tax-Exempt Financing: The generation, transmission and distribution of electricity are highly capital-intensive undertakings. In the 119th Congress, there may be efforts to eliminate or reduce the attractiveness of tax-exempt bonds. Doing so would increase borrowing costs for MRES and for all levels of government. Given the current condition of most state and local budgets, these cost increases could delay, scale back or even shelve many critical projects. MRES is urging opposition to any effort that restricts tax-exempt financing or reduces the federal tax exemption on bond interest.

Reinstating Tax-Exempt Advance Refunding Bonds: Regrettably, prior federal legislation eliminated the ability to issue the advance refunding (or refinancing) of municipal bonds. Recovering this ability would provide substantial savings to taxpayers throughout the country, allowing state and local governments to refinance outstanding bonds at lower interest rates and, as a result, realize considerable debt-service savings. The issuance of advance-refunding bonds to take advantage of market conditions would reduce the cost of financing worthy infrastructure projects. MRES and its member communities support reinstating this important economic development tool.

Build America Bond Payments: MRES, through WMMPA, issued Build America Bonds (BABs) in 2010, relying on the government’s promise to pay. Since then, sequestration has reduced BAB payments to issuers like MRES/WMMPA, costing $1 million to date and potentially $4.4 million over the bonds’ term. This undermines the government’s original commitment when the bonds were issued. MRES urges Congress to protect BAB payments and honor federal commitments.

Protecting the federal power program

Fifty-nine MRES members receive hydropower allocations from Missouri River dams, which is administered through WAPA, a federal power marketing administration (PMA). Every few years, misguided proposals surface to reduce the federal budget deficit by altering the ownership, structure or rates of the federal PMAs, or to use PMAs to advance policy objectives unrelated to their core mission.

Proposals to privatize PMAs, including WAPA, or shifting to market-based rates threaten affordable power access and equity for municipal utilities. WAPA customers pay all system costs, including infrastructure upgrades, with no taxpayer subsidies. Privatization or market-based rates would raise costs and negate long-standing customer investments. MRES opposes privatization of WAPA assets and market-based rate changes.

Transmission reform and permitting challenges

As the U.S. faces growing energy demands and the need for a resilient electric grid, transmission reform and permitting issues are at the forefront. Rising transmission costs and slow permitting processes present challenges, particularly for local power utilities that aim to expand infrastructure efficiently without overburdening consumers with rate increases. However, some transmission reform proposals have included language that would increase the Federal Energy Regulatory Commission’s (FERC) jurisdiction over municipal electric utilities. While MRES supports transmission project development and permitting reform, MRES and its members oppose expanding FERC’s jurisdiction over municipal utilities.

To view this year’s position papers in detail, go to mrenergy.com/legislative-regulatory/federal-regulatory.