New Law Allows School Districts to Form Renewable Energy Agencies

A new law allows school districts to join together and construct facilities that generate electricity from renewable energy sources and then sell the electricity they generate to power companies. P.A. 96-946 became effective at the end of June after three years of effort by its proponents. It allows school districts to enter into intergovernmental agreements for the purpose of constructing and operating wind farms, solar farms or any other renewable energy production facility.

The agencies formed by the intergovernmental agreements authorized by P.A. 96-946 will be recognized as separate units of local government. The districts entering into the agreement do not need to be contiguous and can consist of member districts from across the State. Each member district has the power to appropriate money from its operations and maintenance fund for payment of the agency’s expenses. Members also have the power to pay principal and interest on bonds issued by the agency. The bond obligations of the agency, however, are not debts of the member school districts.

The agencies created under P.A. 96-946 will be separate units of government, but they will also have the power to enter into energy production and distribution agreements much like private enterprises. Each member district will appoint a representative to a board of directors to oversee the operations of the agency. The agency itself must register with the State and maintain a place of business. It will have the authority to undertake the necessary steps to construct and operate a renewable energy production facility as well as enter into contracts for the sale of electrical energy.

This unique and innovative legislation encourages the development of green energy resources. School districts that take advantage of the opportunity provided by P.A. 96-946 may be able to reduce their energy costs in the long term and even create an additional revenue source for the future.