O'Halleran Introduces Bipartisan, Bicameral Bill to Provide Relief to Rural Service Providers
WASHINGTON – Today, Congressman Tom O'Halleran (D-AZ-01) and Congresswoman Vicky Hartzler (R-MO-04) introduced the Flexible Financing for Rural America Act of 2020. Senators Kyrsten Sinema (D-AZ) Hoeven (R-ND), Boozman (R-AK), and Smith (D-MN), have introduced the companion bill in the Senate. The legislation allows certain rural utility service (RUS) borrowers to take advantage of current low- interest rates without hefty fines and penalties. This move will allow important electric cooperatives and small, rural telecommunications providers to refinance their debt and help keep critical rural utility providers financially solvent in the face of the COVID-19 pandemic.
Specifically, the bill:
- allows RUS borrowers of qualified loans to request rate adjustments that would be set at the rate determined by the date of enactment and based on the time remaining on the loan;
- allows RUS borrowers to request additional adjustments if deemed necessary due to COVID-19;
- and waives all fees associated with the borrower’s request for adjustments.
“Rural electric utility and telecommunications providers are working around the clock to keep families across America connected to telehealth, education, and loved ones during these difficult times. I am proud to join my colleagues to introduce this bipartisan bill that helps rural electric utility and telecommunications companies financially recover from the toll COVID-19 has taken and reinvest in the communities they serve and come back even stronger for rural America,” O’Halleran said.
“This legislation will be an important tool in ensuring our rural utility providers can withstand financial realities precipitated by the COVID-19 pandemic and allow them to reinvest in the future of rural America. Those of us who proudly live in rural communities depend heavily on these providers as they serve critically important points of service such as local hospitals, emergency response teams, and schools. This bill ensures rural families are able to remain connected with affordable rates during this pandemic. I thank my colleagues in joining me to address the essential needs of rural America in a bipartisan, bicameral manner,” Hartzler said.
Unlike many other types of federal loans, RUS Rural Telecom and Electric Programs loans cannot be repaid early or modified without substantial penalty, making refinancing a RUS loan too costly of an option for borrowers and leaving them holding debt with interest rates significantly higher than those of today. These costs are then passed on to consumers and limit needed infrastructure investments in rural communities.
The Flexible Financing for Rural America Act has received broad support from rural utility providers and the overall private industry, including the NTCA - Rural Broadband Association, the National Rural Electric Cooperative Association, and the Grand Canyon State 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,” Shirley Bloomfield, CEO of NTCA said.
“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,” Jim Matheson, CEO of NRECA said.
“This critical legislation will enable Arizona’s Rural Electric Cooperatives to refinance Rural Utility Services loan debt and take advantage of current lower market rates. The savings realized will be reinvested in the local communities we serve and address Co-ops’ operational and maintenance needs. In the short term, RUS Re-pricing will create greater cash flow flexibility. In the long term, Co-ops will be more agile to respond to future economic uncertainty while continuing to provide safe, reliable and affordable electricity. We are grateful to Congressman O’Halleran for his responsiveness, awareness and diligence in seeking to find solutions to the challenges and concerns of his rural constituents,” Dave Lock, CEO of Grand Canyon State Electric Cooperative Association said.
For full bill text, please click here.