Power Lines Blog

Help preserve tax-exempt municipal bonds

Washington Report American Public Power Assocation

By Paul Ciampoli, News Director, American Public Power Association

With some Members of Congress talking about removing the tax exemption for municipal bonds as part of larger tax reform measures, the public power community must ensure that lawmakers understand all the benefits that flow from tax-exempt municipal bonds.

In 2017, the American Public Power Association has ramped up advocacy efforts to maintain the tax exemption for municipal bonds.

Hundreds of public power officials earlier this year visited offices on Capitol Hill to underscore the vital importance of tax-exempt financing for public power utilities.

The public power officials, who were in Washington, DC, for the Association’s annual legislative rally, spoke with one voice in letting lawmakers know that when it comes to tax reform, Congress should leave municipal bonds alone.

Tax-exempt municipal bonds are the primary source of financing for infrastructure that enables public power communities across the country to keep the lights on.

The Association earlier this year also coordinated efforts to gather signatures on Capitol Hill for a letter that emphasized that tax-exempt bonds are a very important financing tool and should not be disturbed in any tax reform.

The bipartisan letter from Reps. Randy Hultgren, R-Ill.  and C.A. Dutch Ruppersberger, D-Md. was sent to the leadership of the House Ways and Means Committee on March 8. The letter had a total of 156 signatures.

We can’t take our foot off the pedal when it comes to continuing to highlight the vital role that this form of financing plays for the public power community.

Here is how you can help.

Has your utility issued municipal bonds in the last five­ years to fund an electric infrastructure project in your community? If so, would you let us know? If you’ve had new successes/accomplishments with an earlier bond-funded project, we’d love to hear about that, too.

Here are some examples of how public power utilities have utilized bonds as a mechanism to help finance important projects that benefit their communities:

  • Idaho Falls Power in 2015 became debt free after it paid off two, $48 million bonds. The bonds, approved by the town in 1978 and 1984, were used to finance the construction of hydroelectric power infrastructure that still powers the town of Idaho Falls, Idaho. Idaho Falls Power celebrated the occasion with a “bond fire,” setting fire to the pages of a spare bond book from when the bonds were first approved;
  • Washington state’s Snohomish County PUD in 2015 issued approximately $40 million of tax-exempt bonds to help fund the design and construction of new hydro power generation projects, primarily two new hydroelectric facilities. The Washington utility benefitted from very favorable market conditions to lock in a low borrowing rate for the 30-year bonds. The public power utility in 2015 also issued approximately $141 million of tax-exempt bonds to fund a number of system improvements including overhead and underground power lines and substations;
  • In 2014, Seattle City Light successfully sold $265 million of bonds. The utility noted that the sale provided $172 million in new money to support the utility’s capital investments, including upgrades to its aging infrastructure that will improve electric service reliability for customers.

The Association will work closely with you to highlight your “built by bonds” projects — in its news publications, website, social media, blogs, and more.

What Members of Congress most want to hear is what their constituents are doing and how the elimination of tax exemption on muni bonds can impact them.

So please let us know your municipal bond story.

You can send an email to us at News@PublicPower.org with a sentence or two about your project and we’ll take it from there.

Paul Ciampoli

Paul Ciampoli

News Director