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Industry Insights

IIJA vs. ARRA: A Closer Look at What Utilities Need to Know

IIJA Smart City

The energy industry continues to navigate the impacts of climate change, aging energy infrastructure, unpredictable supply chains and more. As circumstances evolve and new challenges arise, the need to modernize the grid is more urgent than ever before. With the signing of President Biden’s Infrastructure Investment and Jobs Act (IIJA) into law in November 2021, it is critical that the Administration give the green light on projects as soon as possible, allowing utilities and cities to make progress toward carbon reduction initiatives.

IIJA prioritizes several broad policy objectives – climate resilience, high quality jobs, equity and diversity, environmental justice and expanding the domestic supply chain. Specifically, the funding includes:

  • $65B for power infrastructure
  • $7.5B to fund electric vehicle charging network programs
  • $5B for zero- and low-emission buses
  • $55B for water infrastructure
  • $65B for broadband infrastructure

 

Although the $1.2 trillion IIJA legislation is the largest American investment in the resilience of physical and natural systems to date, it’s not the first. There has not been a more substantial investment by the U.S. government since the Great Depression and President Franklin D. Roosevelt's "New Deal" in the 1930s.

For a lack of better words, IIJA is a “Big Deal,” and an opportunity that we cannot afford to miss.

Reintroducing ARRA

In 2009, President Obama signed the American Recovery and Reinvestment Act (ARRA) into law in response to the Great Recession of 2008. The act consisted of relief programs in the areas of education, infrastructure, health care and more, with a final price tag of $787 billion – representing the first and largest economic recovery package in over 70 years.

Although both ARRA and IIJA mark moments of historical investment in the energy industry, there are a few key areas where the acts diverge.

Comparing Acts

Both laws were designed to lower carbon emissions and create jobs, yet the Biden Administration also expects that IIJA will support several additional policy objectives: strengthening the domestic supply chain, improving equity and diversity and ensuring environmental justice. While ARRA was focused on “shovel ready” projects, IIJA funding will focus on “shovel worthy” projects. ARRA funding was largely allocated within 18 months of passage, while IIJA includes appropriations spread over a period of five years, which is why utilities looking to apply for federal assistance need to focus on the “long game.”

Another key difference between ARRA and IIJA is that the current infrastructure law has very strict Buy America requirements for projects that receive federal funds. Itron is actively working with the Administration to ensure that any domestic content requirements applied to IIJA funded projects are flexible enough to accommodate the current supply chain challenges that continue to impact most electronics manufacturers. Learn more about our steps to address this in an op-ed published by Utility Dive, written by Itron CEO and president, Tom Deitrich, here.

Moving Forward

Itron and our federal policy advisors played an active role in supporting the passage of this legislation, working with our partners and trade associations, and directly engaging with members of Itron’s Congressional Delegation and key committee staff. Now, we’re focused on ensuring the law’s implementation is efficient and makes sense for our industry, helping our customers to navigate its many details and the exciting opportunities that lie ahead.