Tester Introduces Bipartisan Bill to Help Montana Rural Electric Co-ops Keep the Lights On Amid COVID-19
Senator’s legislation will allow rural electric co-ops and rural telecom providers to refinance certain debts amid coronavirus-related financial hardship
As part of his efforts to prevent significant financial losses for Montana electric co-ops and rural telecom providers due to the coronavirus pandemic, U.S. Senator Jon Tester today introduced his bipartisan Flexibility for Rural America Act to give co-ops the option to refinance Rural Utilities Service (RUS) debt at market rates, making it easier to deliver their critical services to rural America.
"Electric co-ops provide folks in rural Montana with power for their homes, businesses, farms, and ranches-and they're staring down the barrel of significant financial trouble because of this pandemic," said Tester. "My bipartisan bill will provide co-ops with much-needed flexibility by allowing them to refinance some of their debt at market rates, giving them a critical tool that will help keep the lights on our rural communities as they recover from the coronavirus crisis."
The National Rural Electric Cooperative Association estimates that the national financial loss for electric co-ops will be $10 billion by the end of 2022. Traditionally, electric co-ops and small, rural telecom providers have access to low-cost financing from the U.S. Department of Agriculture's RUS, however, this program does not permit borrowers to refinance without a significant penalty.
Tester's legislation will allow electric co-ops to better respond to their economic challenges by giving them the ability to refinance RUS debt to current market rates, giving them the flexibility they need to adapt to COVID-19 related hardships being faced by their rural customers. Specifically, it would require the Secretary of Agriculture, when requested, to adjust the interest rate on RUS and FFB Electric and Telecommunications debt without penalty. The adjusted interest rate is determined by the Treasury rate on the date the bill is enacted and that most closely matches the remaining term of the loan.
As a farmer from a rural community, Tester has been a steadfast supporter of Montana's rural electric co-ops. At the beginning of the coronavirus pandemic, he successfully pushed the Trump Administration to make Montana's rural electric co-ops eligible for the Paycheck Protection Program. He also fought to reverse a provision of the hastily-written 2017 Republican tax bill that penalized electric co-ops for applying for federal grants, putting their tax-exempt status at risk and jeopardizing jobs and affordable power for thousands of Montanans.