WASHINGTON – U.S. Senator John Boozman (R-AR) joined a bipartisan group of senators to introduce the Flexible Financing for Rural America Act, legislation that would allow electric cooperatives and small, rural telecommunications providers to refinance their Rural Utilities Service (RUS) debt at lower interest rates.
By taking advantage of current lower interest rates, rural cooperatives and businesses would gain flexibility in managing their cash flow, allowing them to invest in rural communities and pass savings on to customers. At the same time, the bill would enable a stronger recovery from the economic challenges of the COVID-19 pandemic. Rural cooperatives and businesses have struggled throughout the pandemic as a result of a decline in electricity consumption from industrial sources and an increase in unpaid bills from customers who have faced financial hardship.
“Connectivity has long been a struggle for Americans who live in rural areas. COVID-19 has only made that challenge even more difficult to overcome. This bill gives rural electricity and broadband providers flexibility to meet customers’ needs in these challenging economic times and ensures that rural America will have these vital services to recover and grow when the pandemic is behind us,” Boozman said.
Under current law, the RUS charges significant penalties when borrowers refinance their loans—an option which is allowed only under narrow circumstances. Rural electric cooperatives currently hold approximately $43 billion in RUS Electric Loans, and small, rural broadband providers hold about $3 billion in RUS Telecom Loans. The savings from the senators’ legislation would amount to approximately $2 million per year for the average rural electric cooperative, helping to sustain the organizations through current economic challenges and empowering greater investment in local communities.
“This has been a challenging time for Arkansas’s electric cooperatives. Our priorities during this COVID-19 crisis have been the safety and well-being of our members and employees, and maintaining the delivery of affordable and reliable power,” said Kirkley Thomas, Vice President of Governmental Affairs at Arkansas Electric Cooperatives, Inc. “The economic devastation caused by this pandemic has resulted in significant financial hardships for our rural members as we have seen jobs lost and businesses cease or curtail operations. We applaud Senator Boozman for leading this legislative effort that will save rural Arkansas co-ops millions of dollars as we strive to provide the best possible service to our members.”
The bill was introduced on Thursday by Senator John Hoeven (R-ND). In addition to Boozman, it is cosponsored by Senators Tina Smith (D-MN) and Kyrsten Sinema (D-AZ). Representatives Vicky Hartzler (R-MO) and Tom O’Halleran (D-AZ) introduced identical legislation in the House of Representatives.