Bipartisan Legislation Would Make it Possible for Rural Electric Cooperatives and Telecom Providers to Refinance Rural Utilities Service Debt
Molly Morrissey (Smith), 202-224-9857
Kami Capener (Hoeven), 202-224-2551
Sara Lasure (Boozman), 202-224-4843
Hannah Hurley (Sinema), 202-228-0598
WASHINGTON, D.C. [07/02/20]—Today, U.S. Senators Tina Smith (D-Minn.), John Hoeven (R-N.D.), John Boozman (R-Ark.) and Kyrsten Sinema (D-Ariz.) introduced the Flexible Financing for Rural America Act, which would make it possible for rural electric cooperatives and telecommunications providers to refinance their Rural Utilities Service (RUS) debt at lower interest rates. By taking advantage of current lower interest rates, these rural cooperatives and businesses would be able to better manage cash-flow, invest in rural communities, and pass savings on to customers.
The bill would also spur stronger recovery from the economic challenges of the COVID-19 pandemic. Rural cooperatives and businesses have struggled due to a decline in electrical consumption from industrial sources and an increase in unpaid bills from customers who have faced financial hardship. U.S. Representatives Vicky Hartzler (R-Mo.) and Tom O’Halleran (D-Ariz.) introduced companion legislation in the House today.
“In small towns and rural areas in Minnesota and across the country, electric cooperatives are critical to economic success,” said Sen. Smith. “I fought to make sure rural electric cooperatives could access the Paycheck Protection Program, and now I’m fighting to make sure they’re able to refinance their Rural Utilities Service (RUS) debt at lower interest rates because we need to do all we can to help cooperatives and communities thrive.”
“Electric cooperatives and telecommunications providers are critical to the quality of life in rural areas,” said Sen. Hoeven. “The restrictions on RUS loans hamper the ability of these organizations to cope with the challenges of COVID-19. The Fed reduced interest rates specifically to help businesses through this difficult time, and it makes sense to enable rural electric cooperatives and telecoms to benefit from this important tool, supporting a stronger recovery in our rural communities.”
“Connectivity has long been a struggle for Americans who live in rural areas. COVID-19 has only made that challenge even more difficult to overcome. Our bill gives rural electricity and broadband providers flexibility to meet customers’ needs in these challenging economic times and ensures that rural America will have these vital services to recover and grow when the pandemic is behind us,” said Sen. Boozman.
“Allowing rural utility providers to refinance Rural Utilities Service loans ensures rural Arizona communities continue accessing electric and broadband services during the coronavirus pandemic” said Sen. Sinema.
Here’s what industry stakeholders are saying about the Flexible Financing for Rural America Act:
“America’s electric cooperatives face significant financial shortfalls due to the ongoing pandemic. Despite that, electric cooperatives are working to help their communities by working with co-op consumer-members on extended payment plans, accelerating cash back programs, and expanding broadband access. Economic development has been part of electric co-ops’ DNA for decades and that element of community leadership will be critical as communities rebound from the public health emergency. This essential legislation will give co-ops the flexibility to manage financial shortfalls and focus on the long-term stability of the communities they serve,” said Jim Matheson, CEO of the National Rural Electric Cooperative Association.
“Hundreds of NTCA members have answered the call in committing to keep Americans connected in the most rural and remote parts of the country. These companies and cooperatives will of course do everything within their power to keep delivering on the promise of connectivity for the communities in which they live and serve. At the same time, the economic impacts of the ongoing pandemic make it a challenge for smaller rural operators to sustain services. This critical legislation would help many of our members continue responding to their customers’ needs and building Smart Rural Communities℠ even during this time of crisis,” said Shirley Bloomfield, CEO of NTCA–The Rural Broadband Association. Sen. Smith has been working to get relief to rural electric coops during the COVID-19 pandemic. In May, Sens. Smith and Hoeven led a bipartisan group of senators in urging the U.S. Department of the Treasury and the Small Business Administration (SBA) to support rural electric cooperatives and ensure their access to the Paycheck Protection Program (PPP). When Sen. Smith heard that Minnesota cooperatives were at risk of losing their tax-exempt status if they received grants to expand broadband or recover from a disaster, she wanted to reverse that. The key government spending package that was signed into law last year included her bipartisan bill with Senator Rob Portman (R-Ohio) to ensure co-ops can retain their tax exemptions when they receive government grants.