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New Energy Law Helps Co-ops

You may have already heard that the new federal energy bill can help a homeowner earn a $300 tax credit for installing a highly efficient air-conditioning unit.

Beyond such direct personal incentives, the Energy Policy Act of 2005 will have far-reaching effects for the electric utility industry.

The new law includes rules about all kinds of energy for all kinds of purposes in a document that runs 1,724 pages and weighs about 5 pounds. But electric co-op leaders are praising provisions that recognize the unique features of member-owned utilities.

Parts of the new law mean that America’s electric cooperatives will:

• be even more actively involved in the development and implementation of clean-coal technologies;

• be even more actively involved in integrating renewable energy sources (such as wind and solar) into everyday life; and

• play a vital role in expanding the nation’s electric transmission system while increasing its reliability.

As the legislation struggled through Congress during the past nine years, co-op members worked hard to explain to congressional leaders the differences among electric co-ops, investor-owned utilities, and municipally owned utilities. They managed to convince representatives and senators to recognize the unique situations that electric cooperatives deal with every day.

National Rural Electric Cooperative Association CEO Glenn English says, “Cooperatives emerged from years of struggle during the crafting of this national energy policy in a great position. We will be much better able to handle the challenges that will come up as this century unfolds.”

In many cases, the wording of provisions within the Energy Policy Act helps put electric co-ops on an equal footing with investor-owned utilities. A prominent example is in the provision for Clean Renewable Energy Bonds. Co-ops will be eligible for interest-free loans for financing qualified alternative-energy projects. Many of these kinds of projects, such as generating electricity from methane gas in livestock waste, utilizing wind turbines, and geothermal resources available in remote areas, are especially well-suited for development in the service areas of many rural electric co-ops.

Beginning in January, up to $300 million in these bonds are reserved for rural electric co-ops’ use to finance new projects.

Many of the smallest electric co-ops that rely heavily on financing from the Rural Utilities Service (formerly the Rural Electrification Administration) will now be exempt from certain Federal Energy Regulatory Commission rules. Relief from hiring extra staff to fill out reams of FERC paperwork should help many electric co-ops keep a tighter rein on the cost of providing energy to consumer-members.

Roy Palk, CEO of East Kentucky Power, which generates and transmits electricity to 16 distribution co-ops in the state, notes, “Cooperatives serve some very fast-growing areas and our demand is increasing. The philosophy behind the Energy Act of 2005 is very good for cooperatives because it recognizes the need for wiser use of electricity along with increased energy supplies.”

Carefully thought-out details in the new law about how and when electricity moves through the nation’s power grid should also ensure that electric cooperatives will continue to have affordable access to those transmission lines.

Mike Core, CEO of Big Rivers, which generates and transmits electricity to distribution co-ops in 22 counties, served for two years on a committee of the North American Electric Reliability Council. Core says, “The transmission reliability section of the new bill will ultimately result in mandatory reliability standards. This will help assure the public that all utilities are working toward keeping the bulk power grid maintained and operated with reliability as the focus.”

For highlights and the full text of the Energy Policy Act, visit this Web site:

Energy Act comes to Kentucky

Congressman Ron Lewis (right) visited Hawesville in western Kentucky after the signing of the Energy Policy Act of 2005, to highlight how the new federal law could help Kentucky businesses use more alternative energy. At the Hawesville Weyerhaeuser Operations paper production plant, Lewis talked with Mike Maloney, vice president and mill manager. One of the features of the Energy Policy Act allows electric co-ops to use Clean Renewable Energy Bonds for alternative energy projects. The Hawesville Weyerhaeuser plant, which generates 60 percent of its electricity at the plant site, is working with Kenergy electric co-op to see if those bonds could be used to replace some of its natural gas generation with biomass.

Next month: Student energy awards

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