Consumer Oriented Operating Loans
| Published date | 29 March 2024 |
| Record Number | 2024-06719 |
| Citation | 89 FR 22117 |
| Court | Rural Utilities Service |
| Section | Notices |
Federal Register, Volume 89 Issue 62 (Friday, March 29, 2024)
[Federal Register Volume 89, Number 62 (Friday, March 29, 2024)]
[Notices]
[Pages 22117-22118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06719]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
[Docket #: RUS-24-Electric-0003]
Consumer Oriented Operating Loans
AGENCY: Rural Utilities Service, USDA.
ACTION: Notice.
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SUMMARY: The Rural Utilities Service (RUS or Agency), a Rural
Development agency of the United States Department of Agriculture, is
issuing this notice to announce it will be utilizing its long-standing
statutory authority to consider operating loans under an initiative
known as Consumer Oriented Operating Loans (COOL). COOL funding may be
approved at the discretion of the RUS Administrator to finance
operations for current system borrowers to meet financing needs where
the borrower faces hardship circumstances involving unique, transitory,
or exigent conditions. To qualify for COOL financing borrowers will
commit to create environmental benefits to end users/consumers and
invest in additional new carbon pollution-free electricity and/or
energy efficiency measures. RUS estimates $50 million will be available
for this program in fiscal year 2024.
DATES: This notice is applicable March 29, 2024 and will continue until
further notice.
FOR FURTHER INFORMATION CONTACT: Christopher McLean, Assistant
Administrator, Electric Program, Rural Utilities Service, Rural
Development, United States Department of Agriculture, 1400 Independence
Avenue SW, STOP 1568, Washington, DC 20250-1560; telephone: 202-690-
4492. Email to: [email protected].
SUPPLEMENTARY INFORMATION:
Authority: Section 4 (7 U.S.C. 904) of title I of the Rural
Electrification Act of 1936, as amended, gives RUS the authority to
make loans ``for the purpose of financing the construction and
operation'' of electric infrastructure furnishing and improving
electric service to persons in rural areas.
Definitions: For the purposes of this notice:
Carbon pollution-free electricity means electrical energy produced
from resources that generate no carbon emissions, including marine
energy, solar, wind, hydrokinetic (including tidal, wave, current, and
thermal), geothermal, hydroelectric, nuclear, renewably sourced
hydrogen, and electrical energy generation from fossil resources to the
extent there is active capture and storage of carbon dioxide emissions
that meets EPA requirements; https://www.federalregister.gov/documents/2021/12/13/2021-27114/catalyzing-clean-energy-industries-and-jobs-through-federal-sustainability.
Energy Efficiency Measure means any capital investment that reduces
energy costs in an amount sufficient to recover the total cost of
purchasing and installing such measure over an appropriate period of
time and maintains or reduces non-renewable energy consumption.
Clean Energy Enabling Measures shall mean measures (such as
adopting new technologies and/or making investments) that enable carbon
pollution-free electricity as defined in this notice.
Purpose: To provide funding, at the discretion of the RUS
Administrator, to current system borrowers to meet financing needs in
hardship circumstances involving unique, transitory, or exigent
conditions, such as, but not limited to, power or material cost spikes;
liquidity needs due to weather events, supply chain interruptions, man-
made or natural disasters or circumstances where end users/consumers
could experience excessive rate impacts. Additionally, these loans will
require borrowers to create environmental benefits through investments
in additional new carbon pollution-free electricity, energy efficiency
measures, and/or clean energy enabling measures.
Terms: COOL financing recipients will be required to commit that
the loan funds will be used to benefit the end users/consumers. In
addition, the recipients will also be required to make an investment in
carbon pollution-free electricity, energy efficiency measures, and
clean energy enabling measures acceptable to the Administrator. Such
[[Page 22118]]
investment must be after the date of the loan commitment letter and
prior to two (2) years from the date of the first COOL advance, or
other contract covenant deadline approved by the RUS Administrator
given the unique circumstances of the Borrower. The investment must be
in an amount equal to at least 10 percent of the COOL financing, be
additional new carbon pollution-free electricity and/or energy
efficiency measures and result in quantifiable, greenhouse gas
emissions reductions as evidenced in documentation submitted to the
Agency in form and substance acceptable to the RUS Administrator. In
all other respects, COOL financing will be subject to the same
eligibility, underwriting, loan security and repayment criteria as the
core RUS electric infrastructure loan program.
COOL financing will only be made available if the Administrator
determines that the loan is feasible and sufficient collateral exists
to provide the RUS with adequate security pursuant to a first-priority
lien or shared first-priority lien on system assets to ensure full
repayment of RUS debt. COOL loans will generally follow the RUS
regulations, bulletins and standard policies and procedures for the
type of funding (i.e., direct or guaranteed) approved for the COOL loan
and will be at terms not to exceed 20 years.
The Electric Program will update existing regulations and bulletins
and promulgate new regulations as necessary to implement this new COOL
loan policy.
Background: Historically the RUS has prioritized infrastructure
construction and sparingly utilized its authority to finance operations
and has only approved loans funding operations where a borrower faced a
unique hardship affecting the borrower's liquidity or consumer rates.
The COVID pandemic and severe weather events are recent examples of
such events.
The RUS, on a trial basis, approved COOL financing to several
generation and transmission system borrowers and distribution system
borrowers who sought operating loans to address hardship circumstances.
Under the previously approved COOL financing, the Agency made operating
loans whereas a condition of receiving the COOL financing, the
borrowers committed that the COOL financing would benefit the end
users/consumers and the borrowers also committed that an amount equal
to 10 percent of the principal amount of the COOL financing would be
invested in new energy efficiency measures or carbon pollution-free
electricity technologies. Based on its experience with COOL financing
with these trial cases and the application of the agency's rigorous
underwriting standards, the agency is announcing that COOL financing is
available to current RUS borrowers that encounter the hardship
circumstances described in this notice.
Upon publication of this notice in the Federal Register and until
further notice, the RUS will, in hardship situations, consider new
requests for COOL financing in addition to its existing authorities and
programs. Infrastructure financing will continue to be the RUS Electric
Program's highest priority and COOL financing will only be made
available in hardship cases when funds are available and there is no
negative impact on RUS ability to meet the infrastructure financing
needs in the core RUS Electric Program.
Michele Brooks,
Acting Administrator, Rural Utilities Service.
[FR Doc. 2024-06719 Filed 3-28-24; 8:45 am]
BILLING CODE 3410-15-P
