Congress has passed a new five-year Farm Bill that has sweeping economic and energy efficiency effects for electric co-ops and their members. The Agricultural Act of 2014 is worth $956 billion and ends uncertainty that has plagued farm policy since the last farm bill expired in October 2012.
“The Farm Bill is critical to economic development and rural Americans,” says Jo Ann Emerson, CEO of the National Rural Electric Cooperative Association (NRECA). “It includes meaningful improvements to the Rural Utilities Service electric loan program that will allow co-ops to continue investing in the distribution, transmission, service and generation of safe, reliable and affordable electric power.”
The Farm Bill authorizes the Rural Utilities Service to make zero-interest loans to co-ops, which they can re-lend to their members at low rates to help fund the high initial cost of efficiency improvements and reduce future energy costs and consumption. The loans can be repaid through a charge on monthly electric bills. Access to these new Energy Efficiency and Conservation Loan Program funds are already available.
The bulk of the legislation sets spending levels for food stamps and nutrition programs, crop insurance, commodity price supports, and conservation initiatives. Co-ops serve 93 percent of the nation’s ‘persistent poverty counties,’ so they see first-hand the need for the rural economic programs contained in this bill, Emerson added.
The change also opens the possibility of RUS lending for baseload projects for the first time since 2005, notes a story in Electric Co-op Today. The Department of Agriculture had ceased such funding due to concern over the risks in constructing new power plants. The new law allows RUS borrowers to pay an upfront supplemental risk premium in connection with loans for coal, nuclear or natural gas baseload facilities.
Other parts of the bill important to co-ops extend the guaranteed underwriter program, which facilitates co-op loan financing through 2018 and ensures that an RUS program to bring high-speed internet to rural America is workable.
“The positive impact of this bill will be lasting and significant,” Emerson said.