Key Takeaways

The 2021 Infrastructure Investment and Jobs Act includes $5 billion for Grid Infrastructure and Resiliency.

1. The Act's focus is on maintaining grid reliability against disruptive events – extreme weather, wildfire, or natural disaster

2. Grant funding is limited to the amount spent on eligible activities for the past 3 years (10 years for tribal entities)

3. Many of the program eligible areas are common to utility/co-op ongoing maintenance and capital activity

4. Utilities and co-ops should summarize their costs now and be ready for a fast filing; the program will most likely have more funding requests than available appropriations

 The Senate passed the 2021 Infrastructure Investment and Jobs Act (H.R. 3684) in July 2021, and the House passed a revised version in November 2021. After some final tweaks, the Act will become law.

 The Act contains over $1 trillion in grants and loans for highways, renewable energy, rail, electric vehicles, battery storage, electric grid resiliency, and other areas. The Act includes $5 billion for grid infrastructure and resiliency. Some of the specific Act areas are summarized in this article.

Infrastructure Act Funds Focus on Maintaining Grid Reliability

 The focus of this part of the Act (Section 40101) is to direct grant to avoid "disruptive events," which are defined as "an event in which operations of the electric grid are disrupted, preventively shut off, or cannot operate safely due to extreme weather, wildfire, or a natural disaster.

 The program provides up to $5 billion in grants, at $1 billion per year to public and private sector electric providers, electric cooperatives, and tribal entities.

The amount of a grant to an organization is limited to the amount spent by the organization in the previous 3 years (10 years for tribal entities) on similar grid reliability measures.

 Funding priority

The Act language states that the grants will be provided to those projects that "generate the greatest community benefit in reducing the likelihood and consequences of disruptive events" a statement that is not clearly defined further. 30% of the program amount will be made available as a small utilities set aside. These funds will be available to entities that sell no more than 4 million mWh's annually.

Uses of grant funding

Keep in mind the grant funds are limited to the amount spent by the organization in the previous 3 years (10 years for tribal entities) on similar grid reliability measures. The grant funds can be used for:

1. Weatherization technologies and equipment

2. Fire-resistant technologies and fire prevention systems

3. Monitoring and control technologies

4. Undergrounding of electrical equipment

5. Utility pole management

6. Relocation of power lines or the reconductoring of power lines with low-sag, advanced conductors

7. Vegetation and fuel-load management

8. The use or construction of distributed energy resources for enhancing system adaptive capacity during disruptive events, including microgrids and battery storage

9. Adaptive protection technologies

10. Advanced modeling technologies

11. Hardening of power lines, facilities, substations, and other systems

12. Replacement of old overhead conductor

Some exclusions include the construction of an electric generating facility or a large-scale battery storage facility that is not used for enhancing system adaptive capacity.

What's next?

Our initial view of the uses of grants is that the list is fairly loosely defined and open to many ongoing utility operations and capital projects. For example, if vegetation management is eligible for funding, an organization could submit its vegetation management costs for the prior 3 years (10 years for tribal entities) for grant consideration.

 At a minimum, utilities and co-ops should begin now to summarize their costs for the past 3 (10) year periods in the areas of system maintenance and capital projects to match them to these eligible areas. The program administrative rules will be better defined as the program is launched, but utilities and co-ops should be ready to submit their grant requests as soon as the program begins. Given the loose definitions for eligibility, we guess that the program will be over-subscribed fairly quickly.

  As the program's administrative infrastructure (pun intended) is developed for applicants, we will provide more details on assembling and submitting applications.

 

About Russ Hissom

Russ is the owner of Utility Accounting Education Specialists. He has over 35 years serving electric investor-owned and public power utilities, electric cooperatives, and telecom providers as a past partner in a national public accounting and consulting firm's energy practice. Russ is passionate about the Electric and Telecom Industries and his goal is to share industry best-practices to help better your business and enhance your career knowledge.

Find out more about about Utility Accounting Education Specialists here or you can reach Russ at russ.hissom@utilityeducation.com

The material in this article is for informational purposes only and should not be taken as legal or accounting advice provided by UAES. You should seek formal advice on this topic from your accounting advisor.