[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