Rural Utilities Service, Electric Program Energy Efficiency Effort Gerry Moore Energy Forecasting Branch Chief 1
Some History of the Electric Program Providing reliable, affordable electricity is essential to the economic well-being and quality of life for all of the nation's rural residents. The Electric Programs make direct loans and loan guarantees to electric utilities to serve customers in rural areas. The Electric Programs provide leadership and capital to upgrade, expand, maintain, and replace America's vast rural electric infrastructure t Under the authority of the Rural Electrification Act of 1936 2
Loans Administered by the Electric Program FFB Guaranteed Loans Eligible Facilities: Distribution, transmission (bulk and subtransmission), generation and headquarters (office, service and warehouse) facilities, including system improvements to furnish and improve electric service in rural areas, as well as energy efficiency, demand side management, energy conservation programs, and on-grid and off grid renewable energy systems. Eligible Borrowers: Retail and power supply providers. Interest Rate: Interest rates will be established daily by the United States Treasury. Added to that rate is 1/8 of one percent. The interest rate is determined at the time of each advance. Supplemental Financing Required: No Loan Term: Term of loan not to exceed useful life of the facilities being financed, with a maximum term of 35 years. Power supply borrower s loan term is also based on the term of its wholesale power contracts. 3
Electric Program Customers The 561 distribution, 57 power supply, and grant recipients that currently access capital through the RUS Electric Programs are an integral component of the nation s $255 billion electric utility industry. The majority of borrowers are electric cooperatives established to provide electricity at cost to the consumers/owners who establish the policies and procedures under which the cooperatives operate. The Electric Program also serves a small number of publicly owned utilities, tribal utilities, and small remote private utilities serving rural customers. 4
Eligible Borrowers Eligible borrowers Corporations States Territories Subdivisions Municipalities People's Utility Districts Cooperative Non-profit Limited-Dividends or Mutual Associations that provide retail electric or power supply service needs in rural areas. The Electric Program serves approximately 700 borrowers in 46 states, plus the active territories of the Marshall Islands, Puerto Rico, and American Samoa. 5
Loan Dollars by Project Type In fiscal year 2010, we approved $2 billion for new distribution facilities, $595 million for transmission, $313 million for renewable energy projects, and $675 million for environmental improvements. $2,500,000,000 $2,000,000,000 $1,500,000,000 $1,000,000,000 $500,000,000 $0 New Distribution Distribution Transmission Renewables Warehouse Reimbursement and Headquarters Acquisitions Environmental Improvements Loan Programs By Purpose 6
Figure 8: Counties Impacted by Power Supply and Distribution Loan Programs 7
If that is not enough! The 2008 Farm Bill provided RUS with the express authority to implement an energy efficiency program. Existing Energy Resource Conservation (ERC) program is limited to direct loan principal deferments capped at 7 years. 8 8
Recovery Through Retrofit In May 2009 Vice President Biden charged the White House Council on Environmental Quality (CEQ) with developing a proposal for Federal Action that will grow green job opportunities and boost energy savings by retrofitting homes for energy efficiency In response, CEQ has facilitated an interagency process to develop a report with recommendations with specific Federal actions addressing barriers to the development of a national-scale home retrofit market The CEQ RTR Team is comprised of multiple Federal Agencies including Energy, Agriculture, Labor, Housing, EPA and others 9
Recovery Through Retrofit Barriers Some of the identified barriers to improving home energy efficiency improvements include Access to Information Consumers do not have access to reliable and straightforward information about home energy retrofits Access to Financing The upfront costs of home energy efficiency improvements are often beyond the average homeowners budget Access to Skilled Workers There are currently not enough skilled workers and entrepreneurs to accommodate retrofit programs on a national scale 10
Recovery Through Retrofit Agency Efforts Home Energy Score (DOE) Develop and test a software based Home Energy Scoring (HES)Tool Train and qualify home energy assessors to conduct home energy efficiency analysis using the HES tool Pilot the program in 10 states for testing and development of the HES tool Compare the results of the HES tool against other energy efficiency methods USDA / Rural Cooperatives helped the DOE effort by piloting the HES Tool in four states 11
Recovery Through Retrofit Home Energy Score (HES) Rural Pilots South Carolina Rural Electric Assoc SC Group includes 20 consumer owned electric cooperatives & a wholesale power supply cooperative Hoosier Energy Rural Electric Cooperative IN G&T Cooperative with 18 members based in Bloomington, Indiana United Electric Cooperative Services, Inc. - TX Electric Distribution Cooperative based in Cleburne, Texas Central Electric Power Cooperative - VA Electric Distribution Cooperative based in Arrington, Virginia 12
Rural Economic Development Energy Efficiency Effort REDEEE REDEEE is the USDA team supporting Recovery Through Retrofit REDEEE consists of Rural Utilities Service, Rural Housing Service, Rural Business Service and Community Facilities USDA s Rural Development programs are ideal for supporting energy efficiency for housing, businesses, farms and utilities 13
Rural Economic Development Energy Efficiency Effort REDEEE Objectives Communication with electric cooperatives selected by DOE s RTR team Train the electric cooperatives on RD s funding resources that can affect energy efficiency Communication i with RD State staff on RTR progress Scope Initial scope includes electric cooperatives in South Carolina, Indiana, Virginia and Texas Expanded scope included all homeowners and small businesses served by rural electric cooperatives across the country 14
REDEEE Rural Business Rural Economic Loan Program Rural Economic Grant Program Rural Housing Program 502 Guaranteed Program 502 Direct Program 504 Direct Program Community Facilities Direct Loans Direct Guarantees Grants Rural Utilities Service Federal Financing Bank Potential Funding associated with REDEEE 15
Rural Economic Development Loan and Grant REDLG Loans Applicant Eligibility Eligible RUS borrower under 7 USC 940c, and Does not have any delinquent debt with the Federal Government Purpose Loans are made to eligible intermediaries to promote rural economic development and job creation in rural areas 16
Rural Economic Development Loan and Grant Eligible Uses of REDLG Loan Funds Project feasibility studies Advanced telecommunications services and computer networks for medical, educational and job training services Community Facility type projects Energy Efficiency Upgrades 17
RED Loan Terms Loans must carry an interest rate of 0% Loan term may not exceed 10 years Loan may have deferral of up to 2 years for start up operation and 1 year for established operations. 18
REDEEE/ RTR Reporting Weekly to the AAE Monthly to the USEC and ADM Monthly to CEQ Quarterly presentations to the USEC SharePoint with information is maintained 19
Energy Efficiency Regulation In the manual RUS proposes to publish, we expect one accepted business practice would include the ultimate consumer could repay the loan through on-bill financing similar to the REDLG1 program This loan program is not targeted at specific energy efficiency technologies but allows borrowers to utilize a wide variety of energy efficiency products and services. We expect these loans will be smaller relative to other RUS loans. RUS is utilizing authority authorized in 2008 Farm Bill to implement an energy efficiency loan program. A purpose of the proposed EE program is to foster the creation of new and permanent jobs in rural areas. This is an opportunity for USDA to partner with sister departments such as DOE 20
Energy Efficiency Regulation RUS expects to publish the proposed rule imminently. We expect the program to be funded out of existing authority and appropriations The regulation will allow new financing opportunities for RUS borrowers to provide energy efficiency and weatherization activities to businesses and homeowners in rural America. Currently over ninety percent of rural cooperatives (RUS primary borrowers) have some form of energy efficiency program. This program will help leverage and expand existing and new energy efficiency programs. This program is envisioned to include a relending program that enables borrowers to lend to the businesses or homeowners 21
http://www.rurdev.usda.gov/recd_map.html 22
www.usda.gov/rus/electric georg.shultz@wdc.usda.gov gerard.moore@wdc.usda.gov gov 23 23