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Tennessee Rural Electric Co-ops to Benefit from Inflation Reduction Act


Friday, September 16, 2022   

The Inflation Reduction Act has made a historic investment of $370 billion dollars to fight climate change over the next decade.

Among its benefits, the act will provide tax credits for Rural Electric Cooperatives to move toward clean energy.

Brianna Knisley is Tennessee campaign manager for Appalachian Voices - a founding member of the Rural Power Coalition.

She said the act significantly changes the economic landscape for Tennessee public utilities or not-for-profit utilities, to implement renewable energy and energy efficiency.

"There are some new pots of funding for electric cooperatives to transition," said Knisley. "And then also, the direct pay tax credit for renewable energy has been extended to nonprofit entities, which means co-ops and municipal utilities can now access that tax credit."

Meanwhile, Knisley noted that access to tax credits may be limited because of barriers that the Tennessee Valley Authority has put in place.

TVA produces all electricity in the state.

She added that utilities that distribute power - which includes the electric co-ops - are in long-term or never-ending contracts with TVA and those contracts limit how much solar energy they can generate themselves.

Knigley noted that there are key provisions in the Inflation Reduction Act that would benefit co-ops.

She said the provision of $9.7 billion of U.S. Department of Agriculture Assistance for Electric Cooperatives is going to co-ops that can achieve the greatest greenhouse-gas emission reductions.

She said a second provision will benefit co-ops in Tennessee.

"Now, the next item," said Knisley, "the $1 billion in additional funding to cover the cost of loans related to renewable energy, that program, I think, is one that co-ops and Tennessee could take advantage of and are hopefully going to be really interested in because up to 50% of the cost of those loans can be forgiven."

Meanwhile, she said the electric cooperatives have recently warned customers that they may receive higher energy bills soon.

She noted the higher prices are a result of a fuel cost adjustment from the TVA. The increase is primarily because of natural gas prices.

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