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Electric Co-op Today - House Panel Rejects Curbs on RUS

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By Steven Johnson

A House subcommittee has rebuffed changes proposed by the Obama administration that would place new restrictions on Rural Utilities Service lending to electric cooperatives.

Instead, as part of a fiscal 2014 appropriations bill, the agriculture appropriations subcommittee took steps to provide more flexibility in the $4 billion Electric Loan Program.

By voice vote, the panel on June 5 approved a $19.5 billion spending bill for agriculture and rural development programs, including RUS. The bill now goes to the full House Appropriations Committee.

"The funding in this bill will help keep America's agricultural research cutting-edge, maintain vibrant rural communities, provide nutrition to those most vulnerable, and keep our markets competitive while maintaining the safest food and drug supply in the world," said Rep. Robert Aderholt, R-Ala., the subcommittee chairman.

The subcommittee bill calls for $4 billion for the Electric Loan Program for fiscal 2014, which starts Oct. 1.

That's the same amount as the administration proposed, and the same amount requested by 134 members of the House in a letter sent to the subcommittee in April.

But the accompanying language in the two plans differs sharply. The administration's budget allocates $3 billion for renewable energy and carbon capture projects, with $1 billion set aside for environmental upgrades.

That would leave no money for other transmission and distribution projects, and would effectively eliminate RUS lending for new natural gas generation.

In contrast, the subcommittee bill rejects those limitations, and allows up to $2 billion of the $4 billion to be used for construction, acquisition or improvement of new or existing fossil fuel-based plants with carbon capture and storage.

The bill also provides $500 million for the Guaranteed Underwriter Program; the administration's budget had no money for it.

The program is a private-public partnership that allows lenders like the National Rural Utilities Cooperative Finance Corp (CFC) to issue a guaranteed note to the Federal Financing Bank, and use proceeds from the note for loans to electric co-ops.

A fee from the underwriter program also supports the Rural Economic Development Loan and Grant Program, which helps co-ops create jobs in their communities.

RUS funding was a focus of the recent NRECA Legislative Conference, as participants from across the country lobbied Congress against the proposed lending constraints.

"This is one step in the appropriations process, but it is a good start. We will continue to work on behalf of policies that promote flexibility for co-ops as they meet their members' needs," said Kirk Johnson, NRECA senior vice president, government relations.


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