Op ed: It’s time to stop a taxing problem for rural Iowa
Submitted by Chuck Soderberg, executive vice president and general manager of the Iowa Association of Electric Cooperatives.
The gap between rural and urban Iowa continues to widen as population, earnings and net farm income are declining in several rural areas. Unfortunately, an unintended consequence of federal tax law changes now threatens to impose an additional financial burden on rural communities.
Under the new tax law, electric cooperatives that receive federal, state or local government grants are at risk of losing their tax-exempt status. This undermines a successful business model that has served America’s rural communities well for decades. It doesn’t matter what the grant is for—storm recovery, broadband deployment or economic development. If grant funding causes a co-op’s non-member income to exceed 15 percent, its tax-exempt status is gone.
Congress inadvertently created this problem, and now co-ops are urging Congress to fix this mistake this year. Such a correction will protect the tax-exempt status of electric co-ops and avoid needless rate increases for many American families and businesses that could result due to the changes being carried out by the IRS. Pending bipartisan legislation known as the RURAL Act (H.R. 2147 and S.1032) clarifies that government grants should not jeopardize the tax-exempt status of electric co-ops.
The bipartisan RURAL Act has been co-sponsored by nearly all of Iowa’s Congressional Delegation, including Senator Ernst and Representatives Axne, Finkenauer, King and Loebsack. We thank them for their support. Senator Grassley currently chairs the Finance Committee in the U.S. Senate which has jurisdiction over this proposed bill because it deals with the tax code. Iowa’s electric cooperatives are depending on Senator Grassley to help restore certainty and common sense to our tax treatment. His leadership can help ensure that co-ops won’t jeopardize their tax-exempt status by accepting government grants.
President Trump Energy Appointees
President Trump has selected Democrat Cheryl LaFleur to be the acting chairwoman of the Federal Energy Regulatory Commission. President Obama previously appointed LaFleur to the FERC. Even though she is a Democrat, LaFleur has had the support of a number of top congressional Republicans.
Regulatory Commission Commissioner Kristine Svinicki has been appointed by President Trump to be chairman of the Nuclear Regulatory Commission, replacing the current chairman Stephen Burns effective immediately.
Senate Democrats Introduce Bill Pushing Carbon Capture Tax Credits
A bill has been introduced by Senate Democrats to bolster carbon capture technology for fossil fuel power plants. The bill, released by Senators Sheldon Whitehouse and Heidi Heitkamp, would expand a federal research tax credit for carbon capture and sequestration technology at power plants. Lawmakers signing on to the bill noted broad support for the carbon capture research tax credit among industry groups, companies and environmental organizations.
Governor Branstad Signs Solar Tax Credit Bill
Governor Branstad signed HF 2468 into law which includes the extension for the Replacement Tax Task Force, geothermal tax credits and solar tax credits.
Federal Appeals Court to Review EPA’s Waters of the US Rule
The US Court of Appeals for the 6th Circuit voted 2-1 to review the Environmental Protection Agency’s Waters of the United States rule. Critics say the rule is overly broad and would “extend federal reach to small streams and dry creek beds.” Dorothy Kellogg, NRECA senior principal, environmental issues, said, “The Waters of the U.S. rule would exert federal oversight over myriads of water bodies, including those that are dry most of the year. And that means many more expensive permits for co-ops to maintain and construct power corridors and site new generation – including renewables.”
Governor Branstad Joins 16 Other Governors in Energy Plan
Governors from 17 states committed to working together to seek cleaner energy and transportation, and to build a better electrical grid. The bipartisan group announced what it's calling the Governors' Accord for a New Energy Future. The governors intend to work together on energy planning and policies. The accord says the goal is to expand participating states' economies while protecting citizens' health and the environment. The governors are from California, Connecticut, Delaware, Hawaii, Iowa, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington.
Obama Signs Bill Providing Emergency Protection for Utilities
President Obama signed “breakthrough bipartisan transportation legislation that helps electric cooperatives respond during emergencies.” NRECA interim CEO Jeffrey Connor said, “Electric cooperatives are grateful that the surface transportation bill establishes clear policies that will allow co-ops to keep the lights on during an emergency without fear of fines and lawsuits from conflicts with environmental laws.”
U.S. Supreme Court Hears Arguments in Demand-Response Case
Arguments were presented regarding the federal rule requiring electricity providers to give financial incentives to customers who reduce power use in times of high energy demand. Paul Breakman, NRECA FERC counsel, stated, “While co-ops strongly support demand response, we challenge FERC’s authority to set demand-response compensation levels.” FERC’s Demand-Response rule will likely be the highest profile case heard by the U.S. Supreme Court this year.
House Speaker John Boehner to Resign
House Speaker John Boehner will resign his post and leave Congress at the end of October. Boehner had planned to retire last year, but his plan changed after the unexpected Republican primary loss of former House Majority Leader Eric Cantor. Boehner announced the decision during a House Republican caucus, in which Republicans discussed a strategy going forward with a government shutdown looming at the end of September.
State Legislative Session Update
On Friday, June 5, the State Legislature completed work on the 2015 Session, five weeks past the scheduled end date. Of note, HF645 successfully passed the legislature which carves out solar tax credits specifically for utilities. The passage of the gas tax was the largest piece of legislative change for the year. Additionally, the Governor has 30 days from the end of Session to review bills for signature. Because of the length of this year's Session, this time period runs beyond the state of the fiscal year, therefore additional legislation was required to allow the departments to operate with temporary funding until the Governor reviews the bills.
State Legislative Session Update
The Iowa Legislature has entered its third week of overtime, with K-12 school funding still serving as the lightening rod. Other budget bills are making their way through the conference committees and two have been signed by Governor Branstad: the transportation and agriculture budgets. House and Senate leaders are not expressing any optimism that agreements will be reached this week.
USDA Releases New State-by-State "Made in Rural America" Report
The USDA announced a new state-by-state "Made in Rural America" report illustrating the impact of USDA investments in rural communities. Each state factsheet highlights specific USDA investments in rural businesses, manufacturing, energy, water and other infrastructure development. They also outline how USDA is helping rural communities attract businesses and families by investing in housing and broadband. Click here to see Iowa’s fact sheet.
Congress Approves Continuing Budget Resolution
With the end of the federal fiscal year nearing, the U.S. House and Senate approved a continuing resolution to extend funding for the federal government through December 11, 2014. The 21-page resolution funds government at an annual rate of just over $1 trillion and avoids another government shutdown for now. The resolution was approved with language authorizing a program to train and equip moderate Syrian rebel groups to fight the Islamic State in Iraq and Syria (ISIS) and funding to combat the Ebola epidemic. Congress has since taken a recess through the midterm elections.
DOE Tells Representatives how EPA Rules Will Increase Electricty Costs
On February 11, 2014, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing on the Department of Energy’s clean coal programs. At the hearing, Rep. Joe Barton (R-TX) questioned how much these new technologies to capture carbon pollution would increase the cost of electricity. DEO Deputy Assistant Secretary for Clean Coal Dr. S Julio Friedmann answered “something like a 70 to 80 percent increase on the wholesale price of electricity.”
You can view the two minute video by clicking here, which is well worth the watch.
When the President first made his Climate Plan announcement last June, electric cooperatives knew his plan could affect co-op members across the nation. Statements like these from the hearing prove that we should be worried, and need to step forward to let our Congress know that Americans need affordable electricity.
Join with Coop Nation and send your message to EPA at www.action.coop. Tell the EPA we need an all-of-the-above energy strategy.
Iowa Legislators Pass FEMA Resolution
The Iowa Senate and Iowa House have unanimously passed a Concurrent Resolution calling on the Federal Emergency Management Agency (FEMA) to reverse its decision denying federal disaster aid to Iowa electric cooperatives and municipal utilities following snow and ice storms last year.
Since FEMA’s denial, Iowa co-op directors and managers have been dialoguing with Iowa legislators about the issue and have been working toward a resolution. Pella Cooperative Electric and the rest of the Iowa cooperatives are encouraged and thankful for the legislators’ resolution.
The resolution states, “for the first time in the nation, the Federal Emergency Management Agency has determined that these utilities have not been able to substantiate that their conductor was in good repair and was properly maintained prior to the storm event because unprecedented physical testing of their overhead lines was not performed.”
Additionally, it highlights the fact that the Iowa Utilities Board, which regulates Iowa electric cooperatives and utilities, requires regular reliability plans and system inspections proving that the affected systems where in working condition before the storm. FEMA has argued that without comprehensive laboratory testing of transmission lines, the cooperatives and utilities would be unable to show that damage was caused during the storm.
Lyon County Rural Electric Cooperative, Iowa Lakes Electric Cooperative, Osceola Rural Electric Cooperative and Sanborn Municipal Utilities, along with the Iowa Department of Homeland Security and Emergency Management, have filed a formal appeal with FEMA, asking that they reverse their decision.
The full resolution is available online here. More than 100 co-op directors were in attendance as the Iowa Senate passed the resolution.