ARLINGTON, Va. – As the COVID-19 and economic crises continue to hammer rural America, National Rural Electric Cooperative Association (NRECA) CEO Jim Matheson today urged Congress to pass legislation to provide a much-needed boost to rural communities.
The Flexible Financing for Rural America Act would allow electric cooperatives to refinance USDA Rural Utilities Service (RUS) loans at lower interest rates, saving co-ops and their consumers as much as $10 billion. This bipartisan legislation was reintroduced today in the Senate, with House introduction expected to follow swiftly. Matheson thanked the bills’ sponsors, Sens. Tina Smith, D-Minn., John Hoeven, R-N.D., Kyrsten Sinema, D-Ariz., and John Boozman, R-Ark., and Reps. Tom O’Halleran, D-Ariz., and Vicky Hartzler, R-Mo., for championing the bill in this session of Congress. The bill was supported by 150 members of Congress a year ago. This year’s bill could be included in another round of COVID-19 relief.
“Many electric co-ops and their consumers are hurting as COVID-19 continues to bring health and financial hardships to rural communities,” said Matheson. “Congress can provide substantial relief to millions of electric co-op members simply by letting co-ops do what other businesses already can—refinance their debt at today’s low interest rates without a prepayment penalty. Every dollar co-ops save means more money in consumers’ pockets.”
RUS bill has strong bipartisan support
“Rural electric cooperatives are critical to economic success in small towns and rural areas across Minnesota,” said Sen. Smith. “We ought to support them so they can continue to boost our infrastructure, all while supporting jobs and improving Minnesotans’ quality of life. I successfully pushed to make rural electric cooperatives eligible for the Paycheck Protection Program during the pandemic. And my bipartisan RURAL Act was signed into law to fix a mistake in the 2017 tax law that put the tax-exempt status of cooperatives at risk if they received government grants to expand broadband or recover from a disaster. Now, I’m focused on making sure electric cooperatives are able to refinance their Rural Utilities Service debt at lower interest rates.”
“Our legislation provides the opportunity for electric and telecommunication cooperatives to refinance their Rural Utilities Service debt at current market rates without penalty,” said Sen. Hoeven. “This is about reinvesting in our rural communities, passing savings on to consumers and further supporting efforts to continue overcoming challenges from COVID-19. Families and businesses living and working in rural communities across North Dakota and the country depend on these cooperatives and the critical services they provide.”
“Allowing rural utility providers to refinance Rural Utilities Service loans helps create jobs and ensures rural Arizona communities can continue accessing electric and broadband services during the coronavirus pandemic,” said Sen. Sinema.
“COVID-19’s impact has been felt intensely across rural America, and largely rural states like Arkansas have been hit particularly hard,” said Sen. Boozman. “Our bill gives rural electricity and broadband providers the flexibility to meet customers’ needs in these challenging economic times, while ensuring the communities they service have an opportunity to thrive when the pandemic is behind us.”
“It’s crucial that we address the needs of our long-overlooked rural communities, who too often encounter barriers in accessing quality, affordable utilities,” said Rep. O’Halleran. “Our Flexible Financing for Rural America Act will extend a lifeline to hundreds of electric cooperatives serving rural families and businesses.”
“In our ever-growing connected society, the need to expand rural broadband in Missouri and across America continues to be one of my top priorities in Congress,” Rep. Hartzler said. “Nearly 30 percent of rural Missourians still lack vital access to highspeed internet. The bipartisan Flexible Financing for Rural America Act will jumpstart these communities, allowing them the same essential telecommunications resources urban areas routinely enjoy in our digital age. I am proud to see strong support for our legislation and its potential benefits for Fourth District families, schools, farms, healthcare providers, and businesses.”
NRECA estimates that co-ops could realize a net savings of $10.1 billion from repricing $42 billion of direct and guaranteed RUS loans held by about 500 co-ops. An average co-op with typical RUS debt could save $2 million a year in interest payments at today’s interest rates.
The National Rural Electric Cooperative Association is the national trade association representing nearly 900 local electric cooperatives. From growing suburbs to remote farming communities, electric co-ops serve as engines of economic development for 42 million Americans across 56 percent of the nation’s landscape. As local businesses built by the consumers they serve, electric cooperatives have meaningful ties to rural America and invest $12 billion annually in their communities.