Electric Co-op Today

President Obama’s proposed fiscal 2012 budget provides flexibility for co-ops that borrow through the Rural Utilities Service, according to top Agriculture Department officials, though it does not lift a years-old curb on RUS lending for baseload generation.

Agriculture Secretary Tom Vilsack says the Obama administration is giving co-ops more flexibility in RUS borrowing. (Photo By: Luis Gomez Photos)

The spending plan, submitted to Congress last month, opens up lending for environmental upgrades at plants powered by fossil fuels and low-emissions units used at periods of peak demand.

“We understand the need for flexibility, and our current authority is one that has been expanded by the budget,” RUS Administrator Jonathan Adelstein told ECT.coop.

“However, it does not go to baseload generation at this point. We are certainly watching the trends and the need for more long-term development of energy and generation to meet the future needs for rural America.”

The administration’s proposed 2012 budget projects $6.1 billion for the RUS electric loan program for fiscal 2012.

That is less than the $6.5 billion appropriated for fiscal 2010, the last year that Congress passed a budget, but a sharp increase from the president’s fiscal 2011 budget, which slashed RUS loan levels to $4 billion.

The Bush administration curtailed RUS lending for baseload generation in 2007, and subsequent budgets have continued that practice.

However, the proposed 2012 budget authorizes up to $2 billion of the $6.1 billion RUS electric loan program for environmental improvements that reduce emissions from fossil fuel-based generating plants.

“We know that’s important,” Agriculture Secretary Tom Vilsack said in a recent interview with ECT.coop.

The balance is reserved for renewable energy, transmission, distribution, carbon capture projects and low-emissions peaking units, like natural gas plants affiliated with facilities that produce electricity from solar, wind and intermittent sources.

Tying low-emission peaking plants with renewables “would ensure that there’s always a constant and steady supply of power and electricity,” Vilsack said. “This should give you the flexibility you need.”

Congress has yet to enact a budget six months into fiscal 2011, so RUS has operated at fiscal 2010 spending levels through a series of continuing resolutions.

Last July, the Senate Appropriations Committee recommended a 2011 appropriation of $6.5 billion, and reopened RUS lending for baseload facilities for up to three demonstration projects, but that bill has been stuck in the congressional budget process.

Vilsack said the Agriculture Department is aware of co-ops’ concerns that renewables alone are insufficient to meet a projected growth in power demand. He urged co-ops to join with other farm groups and organizations to speak with a single voice for rural America, saying that will help attract attention to their messages.

Tags: 112th Congress, Department of Agriculture, Energy and Environment, Obama Administration, Rural Utilities Service