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Rural Development Utilities Programs

Rural Development Utilities Programs. KENNETH M. ACKERMAN Assistant Administrator Program Accounting and Regulatory Analysis NARUC Staff Subcommittee on Accounting and Finance Albuquerque, New Mexico April 23, 2007. Topics. Electric Program Telecommunications Program

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Rural Development Utilities Programs

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  1. Rural Development Utilities Programs KENNETH M. ACKERMAN Assistant Administrator Program Accounting and Regulatory Analysis NARUC Staff Subcommittee on Accounting and Finance Albuquerque, New Mexico April 23, 2007

  2. Topics Electric Program Telecommunications Program Water & Environmental Program Accounting and Depreciation Issues Other Issues

  3. Electric Program

  4. Summary of Historical Electric Programs Loan Budget(Dollars in Million) Loan Program: 2004 2005 2006 Direct 5% 240 119 99 Municipal Rate 1,000 104 100 Direct Treasury Rate 750 1,00099 FFB Guaranteed 1,900 2,100 2,600 Non-FFB Guaranteed 99 0 100 Section 313A 0 1,000 1,500 Total Loan Program 3,989 4,323 4,498

  5. Summary of Loan Program Electric Programs Budget (Dollars in Million) 2007 2007 Loan 2006 Proposed CR Program: Actual Budget Budget Direct 5% 99 99 42 Municipal Rate 100 39 99 Direct Treasury Rate 99 700 990 FFB Guaranteed 2,600 3,000 2,700 Non-FFB Guaranteed 100 0 0 Section 313A 1,500 0 500 Total Loan Program 4,498 3,838 4,331 CR = Continuing Resolution

  6. Distribution Loans Approved By State

  7. Distribution Loans Approved Purposes • 10,245 Miles of New Distribution Lines • 6,300 Miles of Upgraded Distribution Lines • 61 Miles of New Transmission Lines • 4,034 Miles of Upgraded Transmission Lines • $ 600,000 Generation System Improvements • $11,000,00 New Generation (7,000 kW) • $9,595,000 Service/Warehouse/Headquarters Buildings • New and/or Upgraded Service in 221 Outmigration and 99 Poverty Counties

  8. Generation & Transmission Loans Approved

  9. Generation & Transmission Loans Approved

  10. Generation & Transmission Loans Approved By State

  11. Generation & Transmission Loan Purposes • 726 Miles of New Transmission Lines • 599 Miles of Upgraded Transmission Lines • $754,130,000 Generation System Improvements • $824,388,000 For 1,220,000 kW of New Generation • $181,418,600 Generation Emission Reduction • New and/or Upgraded Service in 584 Outmigration and 234 Poverty Counties

  12. Jobs Created From Electric Programs Loans

  13. TOTAL COOPERATIVE SALES (TYPE)

  14. NATION’S LANDMASS

  15. NATION’S POPULATION

  16. DISTRIBUTION MILES OF LINE

  17. TRANSMISSION MILES OF LINE

  18. GENERATION

  19. RENEWABLE ENERGY • USDA, Rural Development recognizes the importance Renewable Energy has to the economies of rural America, as well as the need to ensure a range of availablesources of power. • RD broadlydefines Renewables to include: Wind, Bio-Mass, Solar, Water, and Geothermal energy sources.

  20. RENEWABLE ENERGY • Planning for the transmission is just as important as planning for generation

  21. Rural Development Utilities Programs in collaboration with NRECA “Getting Green Power to Market”

  22. USDA, Rural Development has several financingoptions available for financing Renewable Energy projects. Section9006, Renewable Energy and Energy Efficiency Grants and Loan Guarantees.

  23. Renewable Loans – To Date Renewable Loans – To Date Renewable Loans – To Date

  24. RUS BOX SCORE Hardship Loans As of 3/31/2007 FY Authority ……… $ 99,000,000 Approved (4) …….. $ 40,258,000 Remaining …………. $ 58,742,000 Applications Pending (13) $ 104,456,000

  25. RUS BOX SCORE Municipal Rate Loans As of 3/31/2007 FY Authority ……… $ 100,764,304 Approved (3) …….. $ 27,301,644 Remaining ………… $ 73,462,660 Applications Pending (10) $ 61,650,000

  26. RUS BOX SCORE Treasury Rate Loans As of 3/31/2007 FY Authority ……… $ 990,000,000 Approved (21) …….. $ 401,239,000 Remaining …………. $ 588,761,000 Applications Pending (0) $ -0-

  27. RUS BOX SCORE Loan Guarantees As of 3/31/2007 FY Authority ……… $3,000,000,000 Approved (2) …….... $ 19,238,000 Remaining …………. $2,980,762,000 Applications Pending (34) $11,156,907,900

  28. Telecommunications

  29. TELECOMMUNICATIONSProgram Budgets Infrastructure Loan Programs: Hardship: $143 million $145 million Cost of Money: $247 million $250 million FFB: $299 million $295 million Program 2007 2008 (proposed)

  30. TELECOMMUNICATIONSProgram Budgets Broadband Loan and Grant Program: Program 2007 2008 (proposed) Grants: $ 10 M $ -0- Loans: $ 998.5 M $300 M

  31. TELECOMMUNICATIONSProgram Budgets Distance Learning and Telemedicine Programs: Loans: $128 million $0* Grants: $ 25 million $25 million Program 2007 2008 (proposed) *Unused appropriation carries over from prior year

  32. Broadband Loan Program: FY2007 Budget • 4% Funding: $0 (little demand for the program) • Treasury Rate Funding: $998.5 M

  33. Broadband Loan Program: Statistics 198 Applications Received Totaling $4,332,000,000 Applications Processed as of March 31, 2007 68 Approved $1,212,000,000 24 In Review $ 998,000,000 106 Returned $2,141,000,000

  34. Public Television Digital Transition Grants • Public Television Digital Transition Grants: $4.95 Million Available • These grants assist Public Television Stations serving substantial rural populations in transitioning to digital broadcast television transmission, as mandated by the Federal Communications Commission. Grant funds may be used to acquire and install facilities and software necessary for the transition. Grant funds may also be used for associated engineering and environmental studies. • NOFA Published April 10, 2007 • http://www.usda.gov/rus/telecom/public-tv.htm

  35. Distance Learning and Telemedicine Grants • Distance Learning and Telemedicine Grants: $24.7 Million Available • The DLT Program is designed specifically to meet the educational and health care requirements of rural America. The purpose of the DLT program is to provide financial assistance to enhance learning and health care opportunities for rural residents. • http://www.usda.gov/rus/telecom/dlt/dlt.htm

  36. RTB Dissolution

  37. RTB • The Bank completed the first phase of its liquidation as redemption payments were made to the final two shareholders before the end of Fiscal Year 2006. All 737 private shareholders of the Bank have received their stock redemption payments, which totaled more than $1.43 billion. The only remaining step to conclude the liquidation of the Bank will be the November 13, 2007 pro rata distribution of the remaining $39.7M to the Class A and Class B shareholders at the time of liquidation.

  38. RTB Website • For more information, go to the RTB website: http://www.usda.gov/rus/telecom/rtb/index_rtb.htm

  39. Water and Environmental Programs

  40. Water and Environmental Programs($ Millions) FY 2007 FY 2008 Actual Proposed Direct Loans $ 990.00 $ 1,080.24 Guaranteed Loans $ 75.00 $ 75.00 Grants $ 451.44 $ 346.00 2005 Hurricanes $ 29.90 $ 0 Solid Waste Mgmt Grants $ 3.50 $ 3.50 Individually-owed water well $ 0.99 $ 0 Grants for Water and $ 0.50 $ 0 Wastewater Revolving Total$ 1,551.33 $ 1,504.74

  41. Grants Made FY06

  42. Accounting and Depreciation Issues

  43. Uniform System of Accounts • Proposed Rulemaking expected soon to update our Electric System of Accounts • Will implement recent FERC orders • Clarifies RDUP specific guidance

  44. Uniform System of Accounts • Proposes accounting for Renewable Energy Credits and seeks input from all interested parties on methodologies.

  45. Depreciation Guidelines • Generation Depreciation Policy • Use depreciation rates previously approved by RDUP Administrator unless regulatory body having jurisdiction requires different rates • Do not submit for approval to other regulatory bodies rates not previously approved by RDUP

  46. Depreciation Guidelines • Generation Depreciation Policy • Prescribed rates unless unusual conditions justify special rates • Detailed studies for special cases and submitted to RDUP for approval

  47. Depreciation Guidelines • Nuclear Facilities – Policy • Proposed composite rate must be submitted for approval • If a minor participant in a joint participation project, rate used by majority participant shall be used • Include supporting studies and regulatory orders with proposed rates

  48. Depreciation Guidelines • Recent Special Cases #1 - Majority owner negotiated lower depreciation rate with State Commission • Offset previous recovery of stranded costs • Borrower submitted depreciation study for approval supporting requested rates – Approved by RDUP • Commission rates for majority owner, if used by our borrower, would extend recovery of plant beyond license date for plant

  49. Depreciation Guidelines • Recent Special Cases #2 – Nonregulated majority owner of nuclear facility • License expires in 2014, renewal application not yet filed • Significant investment required in preparation for license extension application • Under GAAP, nonregulated majority owner assumes license will be granted and extends useful life by 20 years

  50. Depreciation Guidelines • Recent Special Cases #2 – Nonregulated majority owner of nuclear facility • Borrower requests approval to defer depreciation on additional investment • Deferral will be amortized over the life of the plant if license extension is approved or written off if there is no approval

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