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USDA-Rural Development- ELECTRIC PROGRAM

USDA-Rural Development- ELECTRIC PROGRAM. Biomass Conference Georgia Center for Continuing Education, Athens, GA Rob Langston, Atlanta, GA Phone/FAX 404-250-9889 Robert.Langston@usda.gov August 30, 2005. What is USDA-RD-RUS? .

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USDA-Rural Development- ELECTRIC PROGRAM

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  1. USDA-Rural Development-ELECTRIC PROGRAM • Biomass Conference • Georgia Center for Continuing Education, Athens, GA • Rob Langston, Atlanta, GA Phone/FAX 404-250-9889 • Robert.Langston@usda.gov • August 30, 2005

  2. What is USDA-RD-RUS? • R.U.S. is the successor to the Rural Electrification Administration (REA) that helped electrify rural America following the Depression years. • Mission: Increase economic opportunity and improve the quality of life for rural residents • Authority through the R.E. Act of 1936

  3. Historical RUS Activity • To provide financing for rural electric generation, transmission and distribution cooperatives • Oversight of borrowers • Engineering and O&M support

  4. Misconception • That RUS can only provide financing for rural electric cooperatives • R.E. Act requires beneficiaries of financing to be “persons in rural areas” • This requirement can be more-broadly interpreted, under 7 CFR 1710.101 to include providing of financing non-coop entities, as long as the ‘beneficiaries’ are ‘rural’

  5. Other Eligible Entities • Corporations • States, territories, & subdivisions/agencies • Municipalities, peoples utility districts • Cooperative, non-profit, and limited-dividend, or mutual associations • The only prohibition (of the RE Act) is that loans cannot be made to individual consumers

  6. Reasons For USDA’s Decision To Support Renewable Energy • Part of President Bush’s National Energy Policy (NEP); a plan to increase the utilization of renewable energy and improve energy efficiency • Declining word petroleum reserves • Clean air and environmental issues

  7. How Can RUS Support “Biomass” and “Renewables”? • RUS can provide financing and grants to eligible recipients

  8. How Much Funding is Available? • $200 million in electric loan funds is available in FY 2005-2006 • Funds are reserved for renewable energy projects • Loan applications are processed on a priority basis (meaning a relatively-prompt loan review process)

  9. RUS Loan Programs Loan Options: Direct loans – of RUS-appropriated funds, or RUS Guaranteed loans – of federal “FFB” money, or of private money with CFC or CoBank

  10. Interest Rates • Interest rates are similar but not identical for direct vs FFB-guaranteed loans, so timing may become the deciding factor. • The applicable interest rate is the published rate at time of each draw of funds

  11. Example Rates and Terms • Presently approx. 1.7% for 1-year fixed • Presently approx. 3.6% for 7-year fixed • Presently approx. 5% for 30-year fixed • - - - - - - - - - - - - - - - - - - - - - - - - - - - - - • Terms of 1, 2, 3, 5, 7, 10, 20, and 30 years • Maximum term not-to-exceed ‘useful life’ • - - - - - - - - - - - - - - - - - - - - - - - - - - - - - • http://www.usda.gov/rus/electric/rates.shtml

  12. All Loans are “Reimbursement” • Details are in 7 CFR 1710 • “Reimbursement” means that RUS loan funds are not available to the borrower ‘up front’ to complete the construction • Construction expenditures are ‘reimbursed’ to the borrower either at the end of the project, or as ‘progress payments’ if part of a construction contract

  13. Example Projects Financed • To date, RUS has financed numerous photovoltaic and wind powered renewable systems nationwide, generally through existing local cooperatives - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - • Recently-announced was a $20 million RUS loan to a privately-owned power company in GA • Project will use plasma arc technology to convert used auto tires into energy and saleable byproducts

  14. Renewable Loans – To Date Renewable Loans – To Date Renewable Loans – To Date

  15. Advantages of RUS funding • Interest rates are at the ‘government’s cost of money’, typically lower than from other market sources (especially for ‘non-conventional’ projects, unproven technologies, or new entities)

  16. Advantages (cont.) • RUS may constitute a single agency for multiple oversight and reporting areas (i.e., environmental, rate regulatory, financial, etc.)

  17. RUS Requirements • Must demonstrate project: • Eligibility for RUS financing (i.e., must provide electricity to “rural area”) • Feasibility to ensure loan repayment • Adequate loan security

  18. Environmental Requirements • Must comply with all environmental laws, including federal, state and local laws • Federal requirements may be more stringent • RUS environmental review must be completed before site preparation or construction begins • (reference 7 CFR Part 1794)

  19. Business Plan Requirements • 1. Specifics of intended project • 2. Org. chart with names/titles of principals • 3. Corp. governance and accounting • 4. Construction & long-term financing plans • 5. Fuel supply plans • 6. Construction work plan (engineering) • 7. Feasibility studies • 8. O&M plans • 9. Determination of ‘useful life’

  20. Business Plan Req’mts (cont.) • 10. Environmental studies • 11. Interconnection agreements • 12. Purchase power agreements • 13. Contract inventory & status (accounting) • 14. Customer electricity market assessments • 15. By-product market assessments • 16. Future expansion plans • 17. Any other useful info.

  21. Business Plan Req’mts (cont.) • Information submitted should be sufficiently detailed and comprehensive, commensurate with the credit risk associated with the amount financed • Should include credit experience of the borrower

  22. Certifications and Other Requirements • Competetive bidding • Equal opportunity and non-discrimination • Debarment and suspension • Restrictions on lobbying • Federal debt delinquency • Drug-free workplace

  23. RUS’ Security • Non-RUS equity requirement of 20+% of total project financing • RUS holds a first mortgage on the facilities owned by the applicant • RUS requires annual audit and financial reporting

  24. Internet RUS Web Site

  25. Internet WEB SITE LOCATION http://www.usda.gov/rus/electric/

  26. “Electric Program” Sub-Pages • FAQ’s • Staff Directory (incl. GFR’s by state) • Loan Programs • Interest Rates • Federal Register • Renewable Energy • Forms • Borrower Directory • Links

  27. Also Visit the “USDA-Rural Development” Website http://www.rurdev.usda.gov/ • For news about renewables and energy efficiency, as well as other loans and grants

  28. RUS Encourages You to Visit Us on the WORLD WIDE WEB http://www.usda.gov/rus/electric http://www.rurdev.usda.gov/

  29. Your First Steps • Determine if you might have an interest in RUS financing for a renewable energy project • Research the available web-based references • Contact the RUS “General Field Rep.” for your state, who will assist you further

  30. GEORGIA RUS Contact • Rob Langston, GFR • USDA-Rural Utilities Service • 40 Chastain Cove NE • Atlanta, GA 30342 • Phone/Fax 404-250-9889 • Email Robert.Langston@usda.gov

  31. Questions Are Welcome At This Time Thank You, Rob Langston

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