Maximizing the Value of the Energy Infrastructure Reinvestment Program for Utility Customers

The document examines the Energy Infrastructure Reinvestment (EIR) Program, which provides up to $250 billion in low-interest loans to transition the US power sector to clean energy. It proposes a 'capital recycling' method where utilities use EIR loans to refinance 'low-quality' rate base components—such as the costs of retiring fossil plants—into 'high-quality' clean energy assets. Through case studies of Alliant Energy in Iowa and Ameren in Missouri, the report demonstrates that moderate EIR leverage combined with capital recycling can significantly reduce ratepayer costs (by 13% to 18% in the examples) while maintaining stable, lower-risk earnings for shareholders. The brief also compares EIR to securitization, noting EIR's lower transaction costs and interest rates, and outlines federal compliance requirements including NEPA, the Davis-Bacon Act, and the Cargo Preference Act.

• The 'capital recycling' approach allows utilities to transform 'low-quality' rate base—characterized by high risk, short recovery periods (5 to 15 years), and potential for regulatory disallowance—into 'high-quality' rate base consisting of clean energy assets with long recovery periods (usually at least 30 years) and stable earnings.
• The Energy Infrastructure Reinvestment (EIR) Program, overseen by the DOE's Loan Programs Office, offers loans with interest rates just 0.375% above US Treasuries of similar tenor and terms up to 30 years, covering up to 80% of project costs.
• For Alliant Energy in Iowa, a scenario using capital recycling with moderate EIR leverage is identified as the optimal balance, providing 13% consumer savings relative to business-as-usual (BAU) while delivering 72% of BAU earnings with reduced risk.
• For Ameren in Missouri, moderate EIR leverage (40%) combined with capital recycling provides 18% consumer savings relative to BAU and delivers 58% of BAU earnings with lower risk, outperforming traditional utility financing and securitization.
• EIR financing is more cost-effective than securitization due to lower transaction costs and lower interest rates, the latter of which has been exacerbated by a 2022 Bloomberg decision to reclassify securitization instruments as 'asset-backed securities.'
• Federal financing through the EIR program requires compliance with the National Environmental Policy Act (NEPA), the Davis-Bacon Act (prevailing wage requirements), and the Cargo Preference Act (requiring at least 50% of gross tonnage to be shipped on US-flag ships).

APA

RMI (2024). Maximizing the Value of the Energy Infrastructure Reinvestment Program for Utility Customers. https://rmi.org/resources/maximizing-the-value-of-the-energy-infrastructure-reinvestment-program-for-utility-customers/

Chicago

RMI. Maximizing the Value of the Energy Infrastructure Reinvestment Program for Utility Customers. 2024. https://rmi.org/resources/maximizing-the-value-of-the-energy-infrastructure-reinvestment-program-for-utility-customers/.

Wikipedia

{{cite report |author=RMI |title=Maximizing the Value of the Energy Infrastructure Reinvestment Program for Utility Customers |date=24 May 2024 |url=https://rmi.org/resources/maximizing-the-value-of-the-energy-infrastructure-reinvestment-program-for-utility-customers/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2024maximizing, author = {{RMI}}, title = {{Maximizing the Value of the Energy Infrastructure Reinvestment Program for Utility Customers}}, institution = {RMI}, year = {2024}, month = may, url = {https://rmi.org/resources/maximizing-the-value-of-the-energy-infrastructure-reinvestment-program-for-utility-customers/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }