[Congressional Record Volume 153, Number 96 (Thursday, June 14, 2007)]
[Senate]
[Page S7748]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      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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