RECs looking for COVID-19 relief in refinancing loans
Rural Electric Cooperatives are making the case for a bill that would allow the RECs, and rural telecommunications providers, to refinance loans they have received from the Rural Utilities Service at current market rates without penalty.
National Rural Electric Cooperative Association CEO Jim Matheson said there is a provision within the Rural Utilities Service that charges a pre-payment penalty if a co-op refinances its loan. Matheson said co-ops are facing some significant financial headwinds, due to the COVID-19 pandemic.
"We can't go back to shareholders on Wall Street," Matheson said. "We just go to the consumers we serve. And every decision, every impact we face as an electric co-op falls squarely on the rate-payers, the owners of the co-op."
Verendrye Electric Cooperative of Velva CEO Randy Hauck said his co-op has about $60 million in debt with the Rural Utilities Service. Verendrye also serves a portion of the city of Minot, especially the Dakota Square Mall, as well as some restaurants and motels.
"We serve 16 hotels," Hauck said. "They're at 10 to 20 percent occupancy. Empty rooms in hotels don't use power. Restaurants, ditto."
Hauck said if passed, the measure would result in about $1 million worth of savings to the co-op members. He said that money could be used to replace some aging power lines and other infrastructure.
"About 2,100 of our 4,600 miles of line is getting towards the end of its life expectancy," Hauck said. "Without load growth, you can't replace that. So if we can reduce our debt service payment, and use that for future infrastructure investment, we could probably do that without having our members pony up and pay more in their rates."
North Dakota Senator John Hoeven (R) is a sponsor of that bill. Matheson said the hope is that the bill will be rolled into the next coronavirus relief package now pending in Congress.