Electric co-ops advocate for RUS loan repricing amid COVID-19
Lorain-Medina Rural Electric Cooperative, along with cooperatives across the United States, are advocating lawmakers to address Rural Utilities Service (RUS) loan repricing and non-payment of utility bills in the next COVID-19 relief package.
Electric co-ops use RUS loans to help finance infrastructure projects that help provide safe, reliable, and affordable electricity to 42 million people in rural America. However, unlike other loans, RUS loans cannot be repaid early or otherwise modified without penalty. As a result, many electric co-ops are forced to hold loans with much higher rates than that of today’s market.
Co-ops are now asking Congress for access to unprecedented low-interest rates by allowing them to reprice RUS electric loan debt. Lowering it to current market rates and charging no penalty to the borrower for lost interest would increase both short-term and intermediate-cash flow for cooperatives. This would help electric co-ops become leaders in the long-term economic recovery from COVID-19. Think of it like refinancing your home mortgage. Unfortunately, under current terms, cooperative do not have the ability to reprice, so cannot take advantage of current market conditions.
As not-for-profit organizations, electric cooperatives are also facing the harsh reality of significant operational shortfalls and severe financial distress if non-payment of utility bills and below-average electricity sales with industry and manufacturing affected by COVID shutdowns. If you have been financially affected by COVID-19 and are struggling with your utility bills, please share your story with your congressional representative in support of RUS loan repricing and COVID relief legislation.
Lorain-Medina would see a decrease in interest payments of approximately $350,000 in the first year alone with subsequent years providing additional reductions, albeit not of that magnitude. This could free up significant capital and allow LMRE to manage current financial shortcomings due to decreased revenue from the current pandemic, while still promoting long-term stability in the communities they serve.
Lorain-Medina Rural Electric is asking all its members make their voices heard by advocating to their congressman or woman in support of H.R. 7483 and S. 4152, The Flexible Financing for Rural America Act. The ability of cooperatives to perform RUS refinancing without penalty and to receive direct financial support to help regain losses and assist members adversely affected by the pandemic are drastically needed. Please let your voice be heard. To take action please visit: https://action.coop/register-composeletters/1473/.