There have been two significant pieces of legislation passed by the U.S. Congress in the last 13 months – the Infrastructure Investment and Jobs Act on Nov. 15, 2021, and the Inflation Reduction Act on Aug. 16, 2022.
Both include a number of programs connected to the energy sector and the utility industry. Figuring out what those mean to Hoosier Energy falls to Matt Randall, Manager of Public Policy and Community Relations.
Randall recently spoke with GridLines about these bills, his role and how Hoosier Energy looks to benefit both now and in the future.
Q: When legislation like this is passed, what’s the first step for Hoosier Energy?
A: The first step is to review and understand all the information out there. Many of these programs are brand new, which means the government has never funded these types of things before. As a result, they are creating offices for them from scratch. My responsibility is to keep an eye on those developments and look for energy programs that could have potential benefits for Hoosier and our members.
Between these two pieces of legislation, it is the single largest investment in the energy industry since The New Deal in the 1940s when Hoosier Energy was founded. So we are connecting with NRECA nationally and our partners at IEC to find opportunities for Hoosier. As we see those arise, it’s a matter of connecting with the right people on our teams at Hoosier Energy to evaluate whether or not a program could be of use.
Q: Is there a pros and cons list to weigh with some of these programs?
The question is whether there are strings attached. At the moment, we don’t see anything in the short-term future where these programs hurt Hoosier Energy. What we’re seeing now is either a program won’t benefit us, so we won’t utilize it or we will apply for grants. The intent of the legislation and accompanying changes are to further spur things in the industry that we are already doing or considering, so all we see are positives.
For example, there are billions of dollars available in electric vehicle infrastructure adding to the work already being done in the industry. And with transmission, we’re not sure how much Hoosier will benefit directly but if those programs facilitate transmission development in the Midwest and Indiana, it would certainly be of value.
There’s upside not only for Hoosier but for cooperatives around the country.
Q: The first bill on infrastructure passed just over a year ago. How are we looking to benefit from it specifically?
A: There’s a particular program with a battery storage project we’re working on. We’re looking at utility-scale, long-duration storage and places to potentially put that on our system. Right now, we are in two parallel processes. One is working with state government – the state has agreed to work with cooperatives to apply for federal, competitive grants for upgrades to the most rural pieces of our infrastructure as part of a state-administered program.
We’re also working with battery developer Delorean Power to secure a second Department of Energy grant for utility-scale, long-duration storage. The goal is to identify applications that offer a low-cost source of firm capacity for Hoosier Energy and our members while providing additional benefits to the transmission system and member-consumers.
Q: The second bill, the Inflation Reduction Act, passed just a few months ago. How much do we know and how much do we still have to learn about it?
The way in which those programs benefit Hoosier is different. For co-ops, two major legislative initiatives were passed into law. The first initiative is $9.7 billion in funding to help co-ops transition fossil fuel plants to more renewable sources. Because we no longer own a large, coal-fired plant like Merom, that program is unlikely to benefit Hoosier.
The second piece, which is most valuable for co-ops, are direct pay tax credits. For Hoosier’s future, we now have the same financial benefit that has existed for private entities for the past 10 years. By those credits being passed, we now have the opportunity to benefit directly from a refundable tax credit up to a 30% for renewable generation we invest in. It will create a level playing field for generating renewable energy for the foreseeable future.
Q: As we head into 2023, what should Hoosier Energy and its members be expecting?
The major legislative initiative we are looking for from a federal perspective is in supporting permitting reform. We are supporting NRECA and industry efforts to get Congress to pass permitting reform to reduce some of the roadblocks and inefficiency as the industry looks to invest billions in transmission infrastructure and renewable energy. I’ve heard it said in meetings with our G&T counterparts across the nation that our transition toward cleaner energy requires the industry to build in 10 years what we’ve built over the past 50 years. We’ll need the government’s help in streamlining the process.
Here in Indiana and Illinois, we will be working alongside our statewide associations to encourage lawmakers to support policies that help us with affordability while giving Hoosier flexibility as we meet our resource capacity needs in the future.