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

This briefing by RMI explores how the Energy Infrastructure Reinvestment (EIR) Program, established by the Inflation Reduction Act (IRA), can be used for "capital recycling" to accelerate the clean energy transition. The author argues that by using low-interest federal loans to displace costly utility equity and refinance "low-quality" rate base components (legacy fossil fuel costs), utilities can reduce ratepayer costs while maintaining sustainable shareholder earnings. The document provides a five-step implementation framework and applies it to case studies of utilities in Iowa and Missouri, while also detailing federal compliance requirements such as NEPA.

• The Energy Infrastructure Reinvestment (EIR) Program provides up to $250 billion in low-interest federal loans, with interest rates set at 0.375% above US Treasuries of similar tenor and terms up to 30 years. To maximize value, RMI proposes "capital recycling," where these loans displace not only utility debt but also more expensive utility equity, potentially using off-balance sheet special purpose vehicles (SPVs) to avoid negatively impacting a utility's credit rating.
• RMI identifies a barrier to clean energy investment in the form of "low-quality" rate base components—unanticipated legacy costs from fossil-intensive systems that are repaid quickly (5 to 15 years). These create high annual costs for customers and high risk for shareholders. Capital recycling transforms these into "high-quality" rate base by using EIR loans to extend recovery periods and lower carrying charges.
• RMI outlines a five-step process for utilities to implement capital recycling: 1) Identify a qualifying reinvestment portfolio (construction must be complete by September 30, 2031); 2) Request a high-leverage EIR loan (up to 80% of costs); 3) Introduce a dedicated non-bypassable surcharge for repayment; 4) Designate EIR proceeds to recover low-quality rate base; and 5) Treat the expunged low-quality rate base as high-quality rate base in base rates.
• In a case study of Alliant Energy Corporation in Iowa, RMI found that a "moderate leverage" (40%) EIR scenario with capital recycling provided the best balance, offering 13% consumer savings relative to business-as-usual (BAU) and delivering 72% of BAU earnings with lower risk. This scenario involved a $355 million EIR loan to recycle the $265 million balance of the Lansing coal plant.
• In a case study of Ameren in Missouri, RMI compared EIR capital recycling to securitization for recovering $513 million from the Rush Island coal plant. While securitization is an option, RMI found that a moderate leverage (40%) EIR loan ($1.9 billion) provided 18% consumer savings relative to BAU and lower transaction costs than combining low-leverage EIR with securitization.
• EIR financing requires compliance with several federal mandates that can impact timelines. The National Environmental Policy Act (NEPA) reviews can take from 1 to 3 months (Categorical Exclusions), 6 to 9 months (Environmental Assessments), or 1.5 to 2 years (Environmental Impact Statements). Additionally, projects must comply with the Davis-Bacon Act regarding prevailing wages and the Cargo Preference Act, which typically requires 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} }