Rural Posted by John Padalino, Administrator, USDA Rural Utilities Service in Energy

During a town hall meeting at USDA Headquarters, Administrator John Padalino explains a new proposed rule that opens the door to financing both smaller and renewable energy projects by USDA. The rule could help utilities reduce costs to customers. Comments are being accepted through July 30th. USDA Photo by Steve Thompson.

Earlier this month, Town Hall meetings at USDA headquarters attracted good commentary on a proposed rule that can serve as a way to transition to energy generation of the future. The Department of Agriculture’s Rural Utilities Service (RUS) held the meetings to hear from rural electric program borrowers, potential borrowers, and financial institutions on proposing rules that clarify how RUS finances renewable energy projects for both rural and nonrural consumers.

This proposed rule has several benefits. First, it will allow USDA to finance projects that current regulations restrict. It will also open the door to financing both smaller and renewable projects. It can have a positive impact on rural communities by strengthening investment in new markets, which will bolster economic development and create jobs. This proposed rule can provide a path for rural utilities to expand their energy portfolios, and transition from our reliance on fossil fuels.

What would this proposed rule change that might trigger these results? The proposed rule would allow rural electric projects to be financed using a “project” model. For example, assets and revenues from a wind generating facility might be used to secure a loan, rather than assets of the entire electric system as is currently required.

This proposed change is the result of the 2008 Farm Bill, in which Congress gave USDA the authority to fund electric generation from renewable resources for both rural and nonrural consumers.

RUS held the town hall meeting to hear from current and potential borrowers on aspects of the proposed rule, such our ability to make loans for renewable electric generation in areas where consumers may include non-rural residents, and industry standards addressing financial and collateral requirements. The comments we receive from this Advanced Notice of Proposed Rulemaking will help us draft proposed rules that more effectively and prudently serve borrowers, while ensuring best investment of our tax dollars.

To read the proposed rule visit the Federal Register at www.federalregister.gov. Information on the proposed rule is also posted on the RUS website, which you can find at www.usda.gov. Comments are due July 30, 2013—you can submit comments via http://www.regulations.gov, and follow the instructions for submitting comments. To read more, click here.