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Power Initiatives: ComEd and American Electric Power Executives Provide Primer on Federal and State Mandates and Incentives

 
Jul 13, 2017
by Brian Klebash

CHICAGO, Illinois – A key ingredient to a recipe for success in the data center world is the ability to navigate and capitalize on government mandates and incentives. In an effort to better understand where the line is drawn between Federal legislation – which is usually IRS or tax-based — and State legislation – which is usually brought to life by a utility company. CapRate caught up with two experts on the topic to illuminate the key differences between and strategies for understanding the two.

Darren Kelsey, Manager of Data Center Marketing and National Accounts for American Electric Power drew some clear distinctions for us. “Federal incentives will come down from federal legislation,” he begins. “State incentives will be legislation that we as a utility and/or companies in that state or that do business in that state will really try to bring about and enforce. The incentives that a utility or energy company would be able to offer really will go along with any kind of economic development incentive or energy efficiency in the area. We offer energy efficiency incentives if a company builds to a high standard of efficiency, whether it be lighting, EMS systems, or things of that nature. So we use that benchmark to offer incentives.”

Meanwhile, Ed Sitar, Manager of Economic and Business Development for ComEd says that federal legislation is more compliance-based. “You have to meet this standard,” he explains. “At the state level, it might be more trying to push the envelope in terms of additional energy efficiency or additional emissions controls. In the de-regulated markets – we’ll say Ohio, for example – it’s different because the utilities don’t typically own the generation directly. So from a federal standpoint we don’t necessarily care about what emissions standards may come along. Our customers are different though, because they’re buying at market and the market is dictating the price of electricity and the fuel mix.”

A germane issue that’s highly relevant as of late is coal plants, according to Sitar. “We’ve seen a lot of coal plants close,” he observes. “Some of that’s because of EPA mandates for clean air, but a lot of it is just the economics of natural gas being so much cheaper that it just doesn’t make sense to build new coal plants or even refurbish plants that are near the end of their useful life. ”

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