Spanberger Urges House to Give Rural Electricity Providers Greater Peace of Mind
WASHINGTON – Rep. Abigail Spanberger, D-Va., wants to reduce the barriers currently preventing many Rural Utility Service borrowers from refinancing their debt to take advantage of lower market rates.
Unlike most private lenders, the Rural Utility Service, a division of the U.S. Department of Agriculture, does not permit borrowers to refinance their debt for the purpose of taking advantage of lower interest rates.
There are few circumstances in which refinancing is allowed, and even then, the penalties imposed on borrowers are costly and significant.
The Flexible Financing for Rural America Act, which is led by Reps, Vicky Hartzler, R-Mo., and Tom O’Halleran, D-Ariz., would allow RUS borrowers like electric cooperatives and small telecom providers to refinance their RUS debt at current market rates, giving them more flexibility when it comes to cash flow.
This flexibility can make all the difference, as small rural service providers are struggling to continue providing essential utilities to rural Americans in worsening economic conditions.
Spanberger threw her support behind the bill because all three electric cooperatives operating in Virginia’s 7th congressional district – Rappahannock Electric Cooperative, Southside Electric Cooperative, and Central Virginia Electric Cooperative – are RUS borrowers.
Over the past decade, the cooperatives have received over $240 million in such loans.
“While pundits constantly pivot to follow the fluctuations of the stock market, Central Virginians are still facing the hard facts of economic uncertainty due to the COVID-19 pandemic,” Spanberger said.
“Some of the local companies that have been hit hardest by the worsening economic crisis are rural utility service providers [whose] reliable power and affordable internet access are more essential than ever,” she said.
“During this challenging period, we should be reducing the number of hoops people have to jump through to keep their businesses running and maintain service for their customers,” she added.
In addition to expanding the opportunities that rural utility services have to refinance their debt, this bipartisan legislation would also prohibit RUS from imposing any penalties or fees on borrowers.
By removing this barrier, the bill ensures that small borrowers are not punished for making the financial decisions that are best for their business and their rural customers
“America’s electric cooperatives face significant financial shortfalls due to the ongoing pandemic,” said Jim Matheson, CEO, National Rural Electric Cooperative Association. “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.”
Gary Wood, president and CEO, Central Virginia Electric Cooperative, said he appreciates Spanberger’s support of the legislation.
“The bill will allow us to reduce interest expense, with the savings passed along to our members,” Wood said. “It also provides financial stability, assuring that COVID-19 related challenges do not impact our commitment to affordable electric service and broadband internet access for all members.”
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