Federal funds could help Ky’s rural energy providers go cleaner and cheaper | Opinion
On May 20, 1936, Congress passed the Rural Electrification Act, providing federal loans to create electrical distribution systems for millions of Americans living in rural areas. Today, Kentucky has twenty-six not-for-profit rural electric cooperatives that serve more than 1.8 million rural customers in 117 of Kentucky’s 120 counties.
Now, these rural electric cooperatives have a once-in-a-generation opportunity to modernize their utilities with a package of six new federal funding incentives provided through the Inflation Reduction Act. These incentives could provide Kentucky’s rural electric co-ops the ability to advance this state’s clean energy transition, modernize our rural energy infrastructure and restructure existing debt from our co-ops. If these new incentives are maximized effectively, the result can be cleaner, more affordable energy for Kentucky’s rural co-op owner-customers.
This opportunity could not have come at a better time, as utilities prepare to address how to increase the electrification of our transportation and building sectors, and how to improve their reliability and resiliency from extreme weather.
Last December’s winter storm Elliott (which resulted in rolling blackouts that challenged the reliability of our existing fossil-based infrastructure) should have been a wake-up call for utilities when the delivery system for fossil gas nearly failed due to frozen control valves.
But for the rural co-ops, there is now help if they decide to take it. A recent report by Evergreen Action as well as analysis by groups such and the Sierra Club have detailed how rural electric co-operatives can leverage the $10.7 billion provided in these programs to support the next generation of rural electrification. Rural co-ops can upgrade their energy infrastructure, strengthen their balance sheets, and make electricity cheaper, cleaner, and more reliable for member-owners with these programs.
The package of federal funds include:
The “Empowering Rural America” (New ERA) program, which is offering $9.7 billion in competitive grants and loans for renewable energy systems.
The “Powering Affordable Clean Energy” (PACE) program, which is offering up to $1 billion in partially-forgivable loans for renewable energy projects.
Clean energy tax credits for investment (ITC) and production (PTC)
The “Energy Infrastructure Reinvestment” (EIR) program which offers guaranteed loans to replace uneconomic energy infrastructure with cleaner energy options.
Right now, our rural electric co-ops are still largely fueled by coal and fossil gas. But coal has become more expensive over time compared to cleaner options, and fossil gas prices have been extremely volatile. And until now, co-ops have not had adequate financial incentives to transition to cleaner, cheaper renewable energy. These federal incentives now change that landscape. But our rural co-ops only have a limited amount of time to act.
Rural electric co-operatives will need to submit a letter of intent for the New ERA program before Sept. 15, and the PACE program before Sept. 29. And then The Rural Utilities Service (RUS), which provides infrastructure improvements for these rural co-ops, has announced that it will specifically prioritize New ERA program applications that promote resilience, reliability, and affordability in their selection of successful applicants. Kentucky is in a strong position to take the maximum advantage of these programs, and we encourage our rural co-operative member-owners pay attention to this opportunity that could help stabilize their electricity bills and prepare them for a cleaner energy future.
Lane Boldman is Executive Director of the Kentucky Conservation Committee, an environmental policy nonprofit located in Frankfort.