The challenge of funding maintenance and improvements on electrical infrastructure is simply a fact of life for cooperatives, but one that the Department of Agriculture’s (USDA) Rural Utility Service (RUS) seeks to make easier. Direct loans and loan guarantees from the RUS Electrical Program help electric utilities like Nobles Cooperative Electric and Federated Rural Electric Association in southwest Minnesota repair and modernize their grids.
The two Western customers were among the latest recipients of nearly $2.3 billion in loans to build and improve rural electric infrastructure. Nobles Cooperative Electric is receiving a loan of $10,903,000, while Federated Rural Electric will receive a $6,364,000 loan. Part of the loan is being used to acquire territory from investor-owned Alliant Energy, said Rick Burud, general manager for both utilities. “Each cooperative will gain about 1,700 new members,” he noted. “We will use the rest of the funding to repair storm damage on our existing system and improving services on the acquired territory.”
Rural electric utilities have long relied on RUS loans to supplement their maintenance budgets and fund special projects, and Nobles and Federated are no exception. The co-ops apply every four years after doing a four-year construction work plan to determine their infrastructure needs. “The loans mainly fund work on our distribution system,” Burud said. “We do everything to from new line construction, purchase automatic meter reading infrastructure to funding new substations.”
The application process does take some patience, Burud acknowledged, but the co-ops are able to complete it in-house. Utilities must provide a financial forecast in addition to the four-year work plan. “The regional USDA representative does a lot of work, too, to ensure everything is in order,” he added.
To help automate the process, USDA has created an online application intake system. Users can create an application, upload attachments, sign certifications and draw service areas, to name a few features that can be accessed any time of the day or night.
Supporting economic development
A strong local economy is just as important to the health of a community as a strong, modern grid, and USDA offers funding opportunities for that type of project, too. Federated REA has built an award-winning economic development program on the tools USDA offers to rural utilities.
Over the last 25 years, the utility has leveraged more than $3.6 million in USDA grants and loans, along with Federated economic development loans, to retain or create more than 1,500 jobs. Projects have ranged from expanding an insurance claim center to installing a wind turbine to building an ethanol plant. Several co-op members have applied for and received grants from the Rural Energy for America Program (REAP) for facility improvements such as grain dryers and ground-source heat pumps. Communities can access a revolving loan fund Federated established in 2008, even for smaller investments such as purchasing a fire truck or building a meeting hall and garage.
“Applicants must be co-op members, but our program also helps members on municipal lines in our territory,” explained Marketing and Communications Manager Andrea Christoffer. “One of the criteria for a loan from the revolving fund is that the project helps the economy of our cooperative’s service area.”
AGCO Corp., a worldwide manufacturer and distributor of agricultural equipment, is not on Federated’s electric system but the company’s employees and customers are. In 2011, the utility helped the company obtain a USDA revolving loan to expand its Jackson, Minnesota, facility and bring a tractor assembly line to town from overseas. The project retained 850 jobs in the area, added more than 200, increased school enrollment and stimulated the local economy. The National Rural Electric Association and the Rural Electricity Resource Council both recognized Federated with awards for community investment.
Get started with USDA
Applying for USDA funding is not that difficult, insisted Christoffer, who used to fill out grant applications for members in the early years of the economic development program. The Federal Register Notices clearly list the required information, she pointed out. “All applicants have to do is answer the questions. And they can contact their state energy coordinator if they need help,” she said, echoing Burud.
Member services representatives and other rural co-op staff can find more assistance on the USDA Rural Development website. Most utilities are aware of programs and services for utilities, but a refresher tour can uncover new opportunities.
For economic development opportunities, check out programs and services for businesses. Several programs, such as REAP, are related to energy use, but loans and grants are available for many other types of business investments, as well. Members of rural electric cooperatives can always give their power providers a call to help them apply for the programs.
Utilities might want to familiarize themselves with programs to fund community and individual projects, too. As Nobles Cooperative and Federated REA know, what is good for the community is good for the utility that serves the community.
Source: USDA Rural Development via Energy Central , 10/23/15