Electric co-ops seek, gain support

June 1, 2007 By    

Rural electric cooperatives (RECs) have not missed a beat in protecting their interests before Congress this session. The non-profit RECs, through the National Rural Electric Cooperatives Association (NRECA) and their 900 member cooperatives, continue to be effective lobbyists for their cause.

Lisa Bontempo Washington Bureau
Lisa Bontempo Washington Bureau

Like many energy interests facing potential and substantial policy changes related to global warming and climate change issues being considered in Congress, the cooperatives are making arguments based on what they believe are their unique needs and concerns.

They argue that they are unable to compete against for-profit, privately financed, investor-owned utilities and thus must be protected with continued subsidies and benefits not given the private sector. They also argue that they need special treatment since they are not in the free market and able to take advantage of tax incentives needed to develop new technologies to keep pace with investor-owned utilities and changing energy policies.

During their annual legislative lobby day on Capitol Hill last month, NRECA estimated more than 2,500 members representing cooperatives from 47 states came to press for their interests. Their agenda focused on climate-change legislation, high shipping costs resulting from railroads, continued funding of the Rural Utility Service and to ask for funding for renewable energy bonds.

With global climate issues before the Congress, RECs are in a difficult position. They are investing billions of taxpayer dollars to build new generating plants that burn coal, one of the major fuels scientists point to as causing greenhouse gas emissions, and also one of the most abundant domestic fuels. RECs rely heavily on coal as compared to municipal or investor-owned utilities. (According to a cooperative testifying before the House of Representatives earlier this year, coal accounts for 80 percent of the electricity generated by cooperatives.)

They continue to argue that only they are able to provide affordable electric service to rural citizens (and increasingly non-rural citizens).

Their significant, subsidized funding continues to flow in billions of dollars from the Agriculture Department’s Rural Utility Service, which provides loans that average up to 2.25 percent lower than commercial loans, according to agency estimates. They also have access to cheap loans through the National Rural Utilities Cooperative Finance Corporation (CFC).

Even so, former member of Congress Glenn English, the long-serving head of the NRECA, wrote members of the House Energy and Commerce Committee this year asking for leniency toward these cooperatives, saying they are “in economic situations that make it very hard for them to invest in cutting-edge technologies.” According to NRECA, “Electric cooperatives will need an estimated $42 billion in infrastructure upgrades and development of transmission and generation capacity over the next 10 years.”

English is pressing for additional access to capital through no-interest loans for his members and asking Congress to expand the Rural Economic Development Loan and Grant Program, which English says has provided more than $350 million in zero-interest loans to cooperatives.

He and NRECA members also are calling for an extension and expansion of the Clean Renewable Energy Bonds, which give cooperatives interest-free loans for developing renewable energy generation. Created in the Energy Policy Act of 2005, the program funded 78 electric cooperative projects in the first year, according to NRECA.

While the propane industry focuses its legislative interests toward energy issues, it should also look closely at this year’s farm bill, including energy and rural development programs through the Rural Utility Service. It seems the RECs continue to want their cake and eat it too.

Lisa Bontempo was a longtime energy lobbyist, including 13 years with NPGA. She remains involved in national politics, and can be reached at lisabontempo@msn.com.

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