ARLINGTON, Va. – National Rural Electric Cooperative Association (NRECA) CEO Jim Matheson and NTCA–The Rural Broadband Association CEO Shirley Bloomfield today applauded the introduction of bipartisan legislation to support rural communities and critical infrastructure providers in response to the COVID-19 pandemic.
Sens. John Hoeven (R-ND), Tina Smith (D-MN), John Boozman (R-AR) and Kyrsten Sinema (D-AZ) introduced the Flexible Financing for Rural America Act in the Senate to allow electric cooperatives and small, rural telecom providers to adjust the interest rate on existing loans from the U.S. Department of Agriculture’s Rural Utilities Service (RUS) loan programs.Reps. Vicky Hartzler (R-MO) and Tom O’Halleran (D-AZ) introduced companion legislation in the House.
“America’s electric cooperatives face significant financial shortfalls due to the ongoing pandemic,” said NRECA CEO Jim Matheson. “Despite that, electric cooperatives are working to help their communities by working with co-op consumer-members on extended payment plans, accelerating cash back programs, and expanding broadband access.”
“Economic development has been part of electric co-ops’ DNA for decades and that element of community leadership will be critical as communities rebound from the public health emergency. This essential legislation will give co-ops the flexibility to manage financial shortfalls and focus on the long-term stability of the communities they serve,” Matheson said.
“Hundreds of NTCA members have answered the call in committing to keep Americans connected in the most rural and remote parts of the country. These companies and cooperatives will of course do everything within their power to keep delivering on the promise of connectivity for the communities in which they live and serve,” said NTCA CEO Shirley Bloomfield.
“At the same time, the economic impacts of the ongoing pandemic make it a challenge for smaller rural operators to sustain services. This critical legislation would help many of our members continue responding to their customers’ needs and building Smart Rural Communities℠ even during this time of crisis.”
America’s electric cooperatives and small, community-based broadband and voice providers deliver essential services in the most rural, and impoverished parts of the country. Many of them meet that challenge, in part, with low-cost financing from USDA’s Rural Utilities Service. However, RUS does not permit borrowers to adjust existing loans simply to take advantage of lower rates, and penalties are significant in the narrow circumstances that allow for refinancing.
The Flexible Financing for Rural America Act would allow electric cooperatives and small, rural telecom providers to adjust RUS debt to current market rates without penalty. This will provide greater cash-flow flexibility to meet the needs of rural consumers in these challenging economic times and allow essential rural utilities to be part of the long-term recovery.
As the coronavirus pandemic causes local businesses to close their doors and hardworking Americans to lose their jobs, new economic projections show the nation’s electric cooperatives could suffer up to $10 billion in lost revenue through 2022. Small rural broadband providers are also seeing consumers struggle to pay voice and broadband bills, with nearly 60% of such providers reporting that uncollectible amounts were up by as much as 10% since the start of the pandemic, and another 15% of providers reporting that bad debt was up by as much as 20% since mid-March.
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.
NTCA–The Rural Broadband Association is the premier association representing nearly 850 independent, community-based telecommunications companies that are leading innovation in rural and small-town America. In an era of transformative technological advancements, regulatory challenges and marketplace competition, NTCA members are leading the technological evolution for rural consumers, delivering robust and high-quality services over future-proof networks that make rural communities vibrant places in which to live and do business. Because of their efforts, rural America is fertile ground for innovation in economic development, e-commerce, health care, agriculture and education, and it contributes billions of dollars to the U.S. economy each year. Visit us at www.ntca.org.