Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - June 14, 2007)

BREAK IN TRANSCRIPT

By Mr. CRAPO (for himself and Mr. Craig):

S. 1630. A bill to amend the Internal Revenue Code of 1986 to exclude certain tax-exempt financing of electric transmission facilities from the private business use test; to the Committee on Finance.

Mr. CRAPO. Mr. President, I am pleased to introduce today a bill to address the increasing need for electric power transmission in our country.

The Nation's network of transmission lines is the super-highway of the electric utility industry and the backbone of the electric grid. It serves as the means of moving large amounts of electricity continuously from powerplants to substations where it is distributed to homes and businesses.

A vibrant transmission system helps prevent reliability problems such as blackouts which have wreaked havoc in California, the Northeast, and the Midwest in the last 5 years. It enables regions rich in energy resources like wind, coal, natural gas, and hydropower, to export energy to power-starved regions of the country. It also serves as the engine of our Nation's economic well-being.

It has been widely acknowledged by Government and industry experts that investment in the transmission system has tapered off significantly and more investment is needed. Planning for the Nation's future electricity needs is a key consideration as adding transmission can take many years, even in the most streamlined process. Decisions on system enhancements needed in the next decade must be made today. As with other components of utility infrastructure, siting and building transmission lines is both difficult and very expensive, often costing much more than $1 million per mile.

Over the last two decades, transmission investment has decreased by $115 million a year, dropping from $5 billion annually in 1975 to $2 billion in 2000. The electric transmission line grid capacity has not been upgraded to meet growth demands, particularly in the rapidly growing West. In 2001, the estimated cost for infrastructure renewal was $1.3 trillion over a 5-year period. Today, that cost has risen to over $2 trillion.

Other investment barriers include lack of regional integrated planning and difficulty in siting new transmission lines. The process can involve acquiring land easements from property owners, and creating a cleared corridor, 70 to 100 feet wide and often many miles long. On top of all this is the uncertainty regarding investment risks and returns.

Adding large transmission lines also requires State regulatory approval, which involves significant permitting, research and modeling data, environmental information, cost comparisons, analyses of various options, discussions of scenarios and criteria used in evaluation, and other information.

Lack of new transmission directly affects the price of retail electricity as a decrease in available transmission lines leads to more limited access to electric generation plants. Any addition of powerplants, including nuclear facilities and renewables such as wind, would also require new transmission lines and facilities.

In short our Nation's economy and population are still growing, and so too are its power needs, but without new transmission, access to new power generation is static, which will in turn lead to rising retail and industrial power costs.

The Energy Policy Act of 2005 included several important provisions to encourage transmission investment. I believe there is more that we can do to accelerate the pace of investment in transmission infrastructure and to lower the cost of those investments.

My State of Idaho and several others have created State infrastructure authorities to finance and promote needed transmission investments. The creation of these State authorities is a new and innovative development that could be the appropriate catalyst for this needed investment. However, the full potential of these State authorities will not be realized under existing law.

As instrumentalities of the State, these authorities can issue tax-exempt bonds to finance transmission projects. But under current law, only a very limited number of industry participants such as other governmental entities, can use these facilities built with tax-exempt bonds. Clearly, we need a system in which new transmission facilities, regardless of the source of financing, are available for use by industry participants.

The legislation I am introducing today amends section 141 of the Internal Revenue Code to modify the so-called private use restrictions on tax-exempt financing of transmission facilities. Under this legislation, any issuer of tax-exempt bonds to finance transmission facilities would continue to be required to own the facilities. However, the operation or use of those facilities by a nongovernmental private party would not jeopardize the tax-exempt status of the bonds. As an example from my State, the Idaho Energy Resources Authority could issue tax-exempt bonds to finance a transmission line and all parties, private utilities, rural electric cooperatives, municipal utilities, independent power producers, could move power across that facility.

Thus, all segments of the industry benefit from new, low-cost investment in transmission. The basic requirement of section 141 that tax-exempt financed facilities serve a general public purpose and are owned by an eligible issuer is retained. And our whole Nation benefits from a transmission system that is more robust, reliable and cost effective.

My legislation sunsets in 5 years. This will provide Congress an opportunity to review the effectiveness and implications of this change in the code.

In addition to support for this proposal from various parties in Idaho, this concept has been endorsed by the Western Governors Association.

It is my hope that this commonsense proposal can be quickly enacted and that lower cost investments in the Nation's transmission grid can be made.

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