USDA-Rural Development- ELECTRIC PROGRAM

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USDA-Rural Development-ELECTRIC PROGRAM

• Biomass Conference
• Georgia Center for Continuing Education, Athens,
  GA
• Rob Langston, Atlanta, GA Phone/FAX
  404-250-9889
• Robert.Langston_at_usda.gov
• August 30, 2005

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What is USDA-RD-RUS?

• R.U.S. is the successor to the Rural
  Electrification Administration (REA) that helped
  electrify rural America following the Depression
  years.
• Mission Increase economic opportunity and
  improve the quality of life for rural residents
• Authority through the R.E. Act of 1936

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Historical RUS Activity

• To provide financing for rural electric
  generation, transmission and distribution
  cooperatives
• Oversight of borrowers
• Engineering and OM support

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Misconception

• That RUS can only provide financing for rural
  electric cooperatives
• R.E. Act requires beneficiaries of financing to
  be persons in rural areas
• This requirement can be more-broadly interpreted,
  under 7 CFR 1710.101 to include providing of
  financing non-coop entities, as long as the
  beneficiaries are rural

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Other Eligible Entities

• Corporations
• States, territories, subdivisions/agencies
• Municipalities, peoples utility districts
• Cooperative, non-profit, and limited-dividend, or
  mutual associations
• The only prohibition (of the RE Act) is that
  loans cannot be made to individual consumers

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Reasons For USDAs Decision To Support Renewable
Energy

• Part of President Bushs National Energy Policy
  (NEP) a plan to increase the utilization of
  renewable energy and improve energy efficiency
• Declining word petroleum reserves
• Clean air and environmental issues

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How Can RUS Support Biomass and Renewables?

• RUS can provide financing and grants to eligible
  recipients

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How Much Funding is Available?

• 200 million in electric loan funds is available
  in FY 2005-2006
• Funds are reserved for renewable energy projects
• Loan applications are processed on a priority
  basis (meaning a relatively-prompt loan review
  process)

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RUS Loan Programs

• Loan Options
• Direct loans
• of RUS-appropriated funds, or
• RUS Guaranteed loans
• of federal FFB money, or of private money
  with CFC or CoBank

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Interest Rates

• Interest rates are similar but not identical for
  direct vs FFB-guaranteed loans, so timing may
  become the deciding factor.
• The applicable interest rate is the published
  rate at time of each draw of funds

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Example Rates and Terms

• Presently approx. 1.7 for 1-year fixed
• Presently approx. 3.6 for 7-year fixed
• Presently approx. 5 for 30-year fixed
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  - - - -
• Terms of 1, 2, 3, 5, 7, 10, 20, and 30 years
• Maximum term not-to-exceed useful life
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• http//www.usda.gov/rus/electric/rates.shtml

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All Loans are Reimbursement

• Details are in 7 CFR 1710
• Reimbursement means that RUS loan funds are not
  available to the borrower up front to complete
  the construction
• Construction expenditures are reimbursed to the
  borrower either at the end of the project, or as
  progress payments if part of a construction
  contract

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Example Projects Financed

• To date, RUS has financed numerous photovoltaic
  and wind powered renewable systems nationwide,
  generally through existing local cooperatives
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  - - - - - - - - - - -
• Recently-announced was a 20 million RUS loan to
  a privately-owned power company in GA
• Project will use plasma arc technology to convert
  used auto tires into energy and saleable
  byproducts

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Borrower Type Units Amount Approval Date
Navajo Tribal Utility Authority OFF-GRID PV 485 640 W UNITS 4,861,000 12/20/00
Basin Electric Power Coop./East River Electric WIND POWER 2 1300 kW NORDEX 3,800,000 1/9/02
Rosebud Sioux Tribe WIND POWER 1 750 kW NEG MICON 566,000 9/12/02
Navopache Electric Coop., Inc. ON GRID PV 5 UNITS TOTAL 467 kW 3,145,000 5/1/03
East Kentucky Power Coop., Inc. LANDFILL GAS 5 PROJECTS 22 MW 27,645,000 9/25/03
Dairyland Power LANDFILL GAS 3 MW 4,960,000 9/25/03
Basin Electric HEAT RECOVERY 30 MW 36,000,000 9/25/03
Washington Electric Coop., Inc. LANDFILL GAS 4.8 MW 7,320,000 8/31/04
Illinois Rural Electric Coop. WIND POWER 1.85 MW 1,300,000 8/31/04
Dairyland Power Anaerobic Digester Methane 3.75MW 9,830,000 9/27/04
P R Power Co. Plasma Arc Torch Technology 8.86 MW 19,602,000 9/28/04
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Advantages of RUS funding

• Interest rates are at the governments cost of
  money, typically lower than from other market
  sources (especially for non-conventional
  projects, unproven technologies, or new entities)

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Advantages (cont.)

• RUS may constitute a single agency for multiple
  oversight and reporting areas (i.e.,
  environmental, rate regulatory, financial, etc.)

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RUS Requirements

• Must demonstrate project
• Eligibility for RUS financing (i.e., must provide
  electricity to rural area)
• Feasibility to ensure loan repayment
• Adequate loan security

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Environmental Requirements

• Must comply with all environmental laws,
  including federal, state and local laws
• Federal requirements may be more stringent
• RUS environmental review must be completed before
  site preparation or construction begins
• (reference 7 CFR Part 1794)

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Business Plan Requirements

• 1. Specifics of intended project
• 2. Org. chart with names/titles of principals
• 3. Corp. governance and accounting
• 4. Construction long-term financing plans
• 5. Fuel supply plans
• 6. Construction work plan (engineering)
• 7. Feasibility studies
• 8. OM plans
• 9. Determination of useful life

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Business Plan Reqmts (cont.)

• 10. Environmental studies
• 11. Interconnection agreements
• 12. Purchase power agreements
• 13. Contract inventory status (accounting)
• 14. Customer electricity market assessments
• 15. By-product market assessments
• 16. Future expansion plans
• 17. Any other useful info.

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Business Plan Reqmts (cont.)

• Information submitted should be sufficiently
  detailed and comprehensive, commensurate with the
  credit risk associated with the amount financed
• Should include credit experience of the borrower

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Certifications and Other Requirements

• Competetive bidding
• Equal opportunity and non-discrimination
• Debarment and suspension
• Restrictions on lobbying
• Federal debt delinquency
• Drug-free workplace

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RUS Security

• Non-RUS equity requirement of 20 of total
  project financing
• RUS holds a first mortgage on the facilities
  owned by the applicant
• RUS requires annual audit and financial reporting

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Internet

• RUS Web Site

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Internet

• WEB SITE LOCATION
• http//www.usda.gov/rus/electric/

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Electric Program Sub-Pages

• FAQs
• Staff Directory (incl. GFRs by state)
• Loan Programs
• Interest Rates
• Federal Register
• Renewable Energy
• Forms
• Borrower Directory
• Links

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Also Visit the USDA-Rural Development Website

• http//www.rurdev.usda.gov/
• For news about renewables and energy efficiency,
  as well as other loans and grants

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RUS Encourages You to Visit Us on the WORLD WIDE
WEB

• http//www.usda.gov/rus/electric
• http//www.rurdev.usda.gov/

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Your First Steps

• Determine if you might have an interest in RUS
  financing for a renewable energy project
• Research the available web-based references
• Contact the RUS General Field Rep. for your
  state, who will assist you further

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GEORGIA RUS Contact

• Rob Langston, GFR
• USDA-Rural Utilities Service
• 40 Chastain Cove NE
• Atlanta, GA 30342
• Phone/Fax [phone]
• Email Robert.Langston_at_usda.gov

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Questions Are Welcome At This Time

• Thank You,
• Rob Langston