Rural Utilities Service:
Still a Great Bargain for the Nation National Rural Electric Cooperatives Association
A
s of year-end 2012, electric co-ops had invested more than $150 billion to build critical infra- structure spanning 75 percent of the United
States. T is network includes 66,500 miles of bulk transmission lines and 2.5 million miles of distribution lines, or 42 percent of the nation’s total. Co-ops also own all or part of 200 power plants with a combined installed capacity of more than 50,000 MW. T ese generate roughly 5 percent of U.S. electricity capacity, distribute 10 percent of all kilowatt-hours sold, em- ploy more than 70,000, and pay more than $1.4 billion annually in state and local taxes. T e linchpin behind these numbers, and the key to
helping electric co-ops “keep the lights on” in some of the most sparsely populated and rugged regions of America for more than seven decades, has been a small amount of support through the federal Rural Utilities Service (RUS). Of course, federal assistance for elec- tric utilities is not unique. For-profi t, investor-owned utilities (IOUs), receive tax breaks, while city-owned municipal electric systems are able to issue tax-exempt bonds. A comparison of electric utilities shows:
• Privately-owned electric co-ops serve an average of 7.4 consumers and receive annual revenue of $15,000 per mile of line. Based on current interest rates, RUS loans (with an average interest rate of 4.57 percent, compared to the government’s cost of borrowing at
6 - Northeast Connection
3.91 percent) actually make money for the U.S. Trea- sury--$163 million combined from 2009 to 2011, more than $274 million during fi scal year 2012, and a pro- jected $369 million in 2013. • Stockholder-driven IOUs average 34 customers and collect $75,000 in revenue per mile of line. In virtual- ly every case, IOUs charge electric rates that include amounts for presumed federal tax liabilities. However, available tax breaks (investment tax credits and accel- erated depreciation) allow IOUs to retain most of the taxes collected, roughly $124 billion to date. At a cost to the government of $4.8 billion in 2011 (the last year available), this federal subsidy to IOUs works out to about $47 per customer. • Publicly-owned municipal electric systems average 48 consumers and collect $113,000 in revenue per mile of line. T e federal government loses revenue when municipals issue tax-exempt bonds because interest paid to bond owners is not taxed. T e cost of this sub- sidy in 2003 (the last year available) was $909 million, or $55 per consumer. “In short, RUS electric loans do not cost taxpayers a
single penny,” indicates Mike Ganley, director of strate- gic planning & analysis for the National Rural Electric Cooperative Association, the national trade organi- zation for America’s electric cooperatives. “Coupled with strong and innovative management and local, consumer governance, electric cooperatives have used
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139 |
Page 140 |
Page 141 |
Page 142 |
Page 143 |
Page 144 |
Page 145 |
Page 146 |
Page 147 |
Page 148 |
Page 149 |
Page 150 |
Page 151 |
Page 152 |
Page 153 |
Page 154 |
Page 155 |
Page 156 |
Page 157 |
Page 158 |
Page 159 |
Page 160 |
Page 161 |
Page 162 |
Page 163 |
Page 164 |
Page 165 |
Page 166