RUS remains vital to cooperatives
At a recent national meeting of electric cooperative leaders, attendees heard President Franklin Delano Roosevelt say that creating the Rural Electrification Administration was one of the “lasting achievements” of his four terms in office from 1933 through 1945. Actually, the statement came from Ed Asner (best known for his years as Mr. Grant on the “Mary Tyler Moore” show), who’s now touring the country in a one-man show portraying the 32nd president of the United States. Asner agreed to bring his performance to the annual meeting of the National Rural Electric Cooperative Association last month to celebrate the 75th anniversary of FDR signing an executive order in May 1935 establishing the Rural Electrification Administration (REA).

“It (the REA) enabled citizens to bring power to themselves with only a little help from government,” said Asner as FDR. “When those electric cooperatives were unleashed, they grew to a force of more than 900 across the country.”

North Dakota’s electric cooperative network is part of that force. Thanks in large part to financing provided through REA (now called the Rural Utilities Service), North Dakota’s 16 local electric cooperatives provide affordable, dependable electric service to more than a third of our state’s population. To do so, these local electric cooperatives have invested more than $1 billion in wires, poles, substations and related facilities to distribute power to homes, farms, ranches and commercial and industrial customers across the state. In addition, five generation and transmission cooperatives that operate in North Dakota have invested more than $5 billion in coal and wind generation facilities and related high-voltage transmission lines to bring power to local cooperatives here and in surrounding states in the Upper Great Plains. These facilities, too, have largely been financed through REA and account for the vast majority of the electric generating capacity in our state. Indeed, it’s clear that REA has made a “lasting achievement” in our state and across the nation.

Even so, throughout the past 75 years, electric cooperative leaders have faced many challenges to keep support for this public/private financing partnership. President Nixon proposed outright elimination of the program in 1972; the Clinton Administration led a reorganization of the agency that led to its current title of Rural Utilities Service in 1994; and numerous administrations (both Democrat and Republican) have proposed reductions in funding and services in years past.
In his budget proposal to Congress for the next fiscal year, President Obama has proposed another such reduction. The administration’s fiscal year 2011 (FY11) budget plan sent to Congress last month would cut RUS electric loan program levels to $4.1 billion — $2.5 billion less than Congress passed for this fiscal year. These are loans that are paid back to the government or loan guarantees, so there is actually little cost to the taxpayers for these loan programs, except for administrative expenses. As troubling as the reduction in loan levels is the administration’s proposal to impose more restrictions on the purposes for which RUS loan funds can be used. The latest proposed restrictions would be on top of limitations already put in place for any new coal-based or nuclear base load generating plants.

If approved, the budget plan would only allow electric loan lending in the future for renewable energy generation, transmission, distribution and carbon capture projects on power plants, which means RUS could no longer lend for peaking natural gas generation and environmental upgrades to existing power plants.

As we’ve done in the past, North Dakota’s electric cooperatives will be asking our congressional delegation to reject these proposals. We’ll urge them to support restoring RUS funding to this year’s levels and to restore lending for base load and peaking generation.

RUS loan financing remains vital to building new electric generation and infrastructure or replacing aging systems serving rural America. Demand for electricity continues to rise, but the geographic challenges of serving more land that people is still daunting. RUS remains the best financing option for the nation’s electric cooperatives as we continue to make expensive investments to serve about 12 percent of the nation’s population spread out over 75 percent of the nation’s landmass.