Remember and uphold RUS roots
By Dennis Hill
North Dakota’s electric cooperative managers and leaders had the opportunity to visit last month with John Padalino, acting administrator of the Rural Utilities Service (RUS).
We want to publicly thank Administrator Padalino and Jasper Schneider, state director for USDA Rural Development, for spending three days in North Dakota to learn more about the state’s energy industry and the future financing needs of our electric and telephone cooperatives and rural water systems.
Our message to Administrator Padalino was one of strong support for the current RUS loan program, which authorizes RUS to loan $6.5 billion to electric cooperatives across the country to finance new construction or renew aging electric infrastructure. This year, RUS has made $114 million in loans to North Dakota electric cooperatives with another $144 million of loans in process. Over the past decade, North Dakota co-ops have borrowed more than $1.4 billion in RUS loans for electric system improvements. We reported to the administrator that we don’t see a downturn in demand for the use of these loan funds in our state anytime soon.
Yet, nationally the demand is not as strong. That’s one reason President Obama has proposed a reduction in RUS loan levels to $4 billion for next year. In addition, the president has proposed restricting the loan funds for only renewable energy generation or environmental upgrades at existing fossil fuel plants. If enacted, RUS could no longer loan funds for construction or replacement of distribution and transmission lines. Instead, Agriculture Secretary Vilsack told a Senate Committee last month that co-ops could turn to private sector banks or nonprofit lenders for those projects.
We oppose those restrictions, and have asked Congress to reject the president’s proposal. We thank Rep. Kevin Cramer, and Senators John Hoeven and Heidi Heitkamp for signing “Dear Colleague” letters that state their opposition to the president’s proposal. The letter they signed (which was led by Sen. Heitkamp and Sen. Johnny Isakson [R-Ga.] in the Senate) reads, in part: “These loans are repaid with interest and have an extraordinary track record of repayment. RUS electric loans also contribute to deficit reduction. In fiscal year 2014 alone, electric loan repayments will net more than $130 million to the U.S. Treasury.
…We (also) suggest RUS lending be driven by the needs of the borrower rather than limited by the type of project proposed.”
RUS has been a backbone financing program for our state’s and our nation’s electric cooperative program. Now is not the time to turn away from its roots.
.Dennis Hill, editor-in-chief of North Dakota Living, is executive vice president and general manager of the North Dakota Association of Rural Electric Cooperatives, Mandan. Comments can be mailed to Dennis Hill, NDAREC, P.O. Box 727, Mandan, ND 58554-0727 or by email to firstname.lastname@example.org.