Rural utilities receive USDA loan guarantees to improve systems

Ten rural electric cooperatives stretching from Alabama to North Dakota to New Mexico will receive $168m in loan guarantees from the USDA Rural Development’s Rural Utilities Service to improve and modernize the efficiency of rural electric transmission and generation systems.

The guarantees were announced Oct. 4 by Dallas Tonsager, USDA’s undersecretary for rural development, during a speech to members of the National Rural Electric Cooperative Association (NRECA).

USDA “continue[s] to support investment by rural cooperatives that will modernize service and improve reliability for rural businesses and residential customers,” Tonsager said in a statement announcing the guarantees, which range from $6.4m for the Frontier Power Company in Ohio to $40.1m for the Central Iowa Power Cooperative.

According to one recipient, the loan guarantees are part of the normal course of business for such organizations.

“We get a construction loan every four years,” a spokesperson for Georgia’s Jefferson Energy Cooperative told TransmissionHub Oct. 5. “We had one for $30m in 2007, we used it and paid it off, and renewed another loan. This is nothing out of the ordinary.”

Other recipients of the loan guarantees include the Cullman Electric Cooperative in Alabama ($29.2m), the South Central Arkansas Electric Cooperative ($10.8m), the Western Cooperative Electric Association in Kansas ($7.2m), the Mora-San Miguel Electric Cooperative in New Mexico ($8.4m), the Dakota Valley (North Dakota) Electric Cooperative ($24.1m), the Wood County (Texas) Electric Cooperative ($32m), and the Mecklenburg Electric Cooperative that serves Virginia and North Carolina ($18.9m).

Central Iowa will use a portion of the funds to add approximately 41 miles of transmission line at 115-kV and above to its system, a spokesperson told TransmissionHub Oct. 5. Six of the ten cooperatives contacted by TransmissionHub stated that, apart from the smart grid projects, 100% of the funds would be used to enhance or upgrade their distribution systems. Three cooperatives did not respond to inquiries by press time.

Of the total funds, $6.9m will be used for smart grid projects in nine of the 10 organizations. Smart grid funding that will allow the co-ops to deploy smart grid technologies ranged from $120,000 for the Mora-San Miguel co-op to $2.4m for the Dakota Valley co-op. Kansas’ Western co-op did not receive smart grid funding.

The cooperatives will receive the funding contingent upon the recipient meeting the terms of the loan agreement, USDA said in its statement.

The loan guarantees help electric utilities upgrade, expand, maintain and replace rural America’s electric infrastructure, according to the statement. The USDA also funds energy conservation and renewable energy projects.