High Electricity Prices? Utilities Have a Coupon for That
Through the Energy Infrastructure Reinvestment program, utility grid investments can be much more affordable and just as reliable.
America’s increasingly electrified economy has a growing appetite for affordable, reliable power. To satisfy this hunger, we need significant investment in new and existing infrastructure to generate and deliver all the electricity necessary. Ratepayers will ultimately pick up the tab for this undertaking, and they deserve the best bang for their buck.
To deliver the most affordable system that meets our growing grid demands, utilities have a responsibility to leave no stone unturned to identify and pursue all cost-saving pathways to lower bills for households, businesses, and industry. If structured well, the Energy Infrastructure Reinvestment (EIR) program of the US Department of Energy offers an unprecedented opportunity to invest in the grid with guaranteed federal loans at a far lower cost than most utilities can secure with their usual financing approaches.
In my home state of North Carolina, the EIR program could save ratepayers at least $415 million, and incrementally add at least 500 MW of solar and battery storage between now and 2032.
As with grocery shopping, coupons (in this case, the EIR program) influence what you purchase and how many of the eligible items you add to your cart, allowing your budget to go further. It’s time for Extreme Couponing for utilities, EIR edition.
What makes for a competitive EIR application: the (not so) secret sauce
The EIR program is one of the biggest cost-saving pathways available today, and perhaps ever in the history of the US energy industry. It offers $250 billion in lending authority at government-backed interest rates to pursue projects that repurpose, retool, or repower existing energy infrastructure.
Many utilities are applying for the EIR program, and forthcoming award announcements will offer insight into what makes for a competitive application to the DOE Loan Programs Office. Utilities that have not yet applied for EIR funding have an opportunity to develop competitive loan applications that maximize the savings potential of a prospective application — getting the most out of their EIR coupons — by identifying investment portfolios that max out EIR-eligible investments. They can also work with their regulators to get approval for cost recovery mechanisms that allow the greatest possible use of EIR funds.
Learning from the efforts to quantify the EIR savings potential in North Carolina, we have outlined three steps to make sure customers see the most benefit from their utility’s EIR funding, shown below in Exhibit 1.
Exhibit 1. Utility Steps to Maximize the Savings Opportunity of the EIR Loan Program
| Utility Step | Benefit | Approach | Guidance Resource |
| 1) Reassess the economically optimal composition of future investments with EIR in mind. | Ensures a utility’s application is economically optimized for investments that are EIR eligible | Simulate EIR loan benefits by utilizing resource plan modeling to discover the best portfolio scenario in the next integrated resource plan proceeding. | Modeling the DOE’s Energy Infrastructure Reinvestment Program in Resource Planning |
| 2) Work with regulators to get approval for a recovery structure that will maximize savings. | Ensures utilities and regulators are aligned on a strategy to maximize ratepayer savings and balance the interests of the utility | Apply for a high-leverage EIR loan while insulating the cost of capital for all the utility’s non-EIR assets. Where possible, use EIR loan funds to pay down the balance of risky/retired/retiring utility assets (i.e., capital recycling) to balance ratepayer and shareholder interests. | Maximizing the Value of the Energy Infrastructure Reinvestment Program for Utility Customers |
| 3) Submit the application. | Completes the process | Submit applications by the end of 2025, so that LPO can complete review and make conditional commitment by Sept 30, 2026. | Title 17 Clean Energy Financing – Energy Infrastructure Reinvestment |
Many utilities have so far failed to conduct even the first step of assessing the economically optimal investment portfolio accounting for the EIR. This is a major problem, not only because it means leaving federal money on the table (and out of customers’ wallets) but also because an affordable electricity future hinges on a rapid deployment of inexpensive wind, solar, and battery storage; and the EIR program can act as an accelerant.
EIR financing can not only finance cleaner resource portfolios, it can also unlock opportunities to deploy clean resources much more quickly than would otherwise be possible, with strategies like clean repowering and grid upgrades such as reconductoring, grid-enhancing technologies, and building new transmission lines cost effectively. If fully leveraged, the EIR can enable a virtuous cycle — cleaner systems deployed sooner, leading to lower system costs — which will benefit utility customers and communities for generations.
While there are real transaction and compliance costs associated with putting together an application, missing the memo is not an option. When utilities fail to move on these historic opportunities, stakeholders have no choice but to attempt to fill the void. In North Carolina, the consumer advocate stepped in to model the EIR savings potential noted above, but there is an easier way.
Modeling the EIR is complex, but utility capabilities are sophisticated enough to handle it.
RMI’s latest insight brief, Modeling the DOE’s Energy Infrastructure Reinvestment Program in Resource Planning, provides a step-by-step instruction manual to empower utility planners to properly evaluate the EIR program. At a high level, the three-step methodology allows a capacity expansion model to optimally determine the appropriate investment portfolio with the EIR program in mind.
The methodology starts by layering in EIR financing for new generation and storage assets only. Then it builds upon the pioneering work the consumer advocate in North Carolina to further suggest how to model EIR for clean repowering resources and maximize EIR savings for transmission investments as well. The insight brief is intended for utility planners and capacity expansion modelers seeking to understand how much savings the EIR can deliver. A detailed technical appendix is provided to support modelers with implementing this methodology.
Recognizing the limited utility uptake of modeling EIR to date, we also identify actions regulators can take to encourage — or, preferably, require — their utilities to employ these steps.
Beyond modeling the EIR program in resource planning, it has a more profound potential to drive ratepayer savings if utilities and regulators take a proactive approach to loan structure design. In Maximizing the Value of the Energy Infrastructure Reinvestment Program for Utility Customers, we outline a financing approach that will allow utilities to take advantage of EIR debt to lower the cost of the total investment portfolio while preserving the utility’s financial integrity.
Maybe later? More like now or never.
EIR funding must be conditionally committed by September 30, 2026. That means that utilities have approximately 22 months to submit a competitive application for EIR funding and negotiate the terms of the loan with the LPO. Counting backwards, the utility planning conducted in the next 12 months represents the final opportunity to identify a savings-maximizing EIR-eligible portfolio that can be included in an EIR application, the last opportunities to deliver for customers who sorely need the savings. LPO needs at least 6 months and often upward of a year to review applications. As such, utilities need to apply for EIR funding by the end of 2025 to meet the conditional commitment date. LPO is clear that regulatory approval is not necessary prior to submitting an application, providing critical flexibility in the dwindling application period.
Wayne Gretzky tells us that you miss 100 percent of the shots you do not take. However, failing to take advantage of the EIR loan program to maximize savings for ratepayers in a time of high and rising investment costs is less of a “missed shot” and more like a dereliction of duty. Failing to leverage the EIR, or failing to do so in a way that maximizes the value of the “EIR coupon,” is improper stewardship over a precious resource: ratepayer dollars.
Utilities that fail to incorporate the EIR program into their next resource plans will have foregone an opportunity to realize a more robust grid at a lower cost for ratepayers.
