Rural Electrification Administration Loans to Electric Distribution Systems: Policy Changes Needed
CED-80-52
Published: May 30, 1980. Publicly Released: May 30, 1980.
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Highlights
Rural Electrification Administration (REA) loans and other assistance have played a major role in bringing electric service to rural America since 1935. Although some electric distribution systems continue to need loan subsidies, others could qualify for and obtain long-term credit from other sources at reasonable rates and terms and still have comparable costs and charge comparable electric rates. Changes are needed in REA loan policies and procedures to identify these borrowers and to better match loan subsidies with individual borrower needs.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Agriculture | The Secretary of Agriculture should direct the Administrator, REA, to develop a legislative plan for revising the policies for making insured loans to rural electric distribution systems. As a part of the plan, new criteria should be developed, based on cost comparisons with urban electric systems, for determining the subsidized loans needed, if any, by the systems to help enable them to charge comparable electric rates. The criteria should be applied on a 2-year cycle to all borrowers requesting loans. Borrowers that can qualify for non-REA loans at reasonable rates and terms, and are not in need of a subsidized loan to charge comparable electric rates, should be ineligible for REA assistance. |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Agriculture | The Secretary of Agriculture should direct the Administrator, REA, to develop criteria for determining which rural electric distribution system borrowers qualify for long-term loans from the private credit sector at reasonable rates and terms. |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
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Topics
Electric power transmissionElectric utilitiesEligibility criteriaGovernment guaranteed loansPolicy evaluationRural economic developmentUtility ratesInterest ratesRural electrificationLoan guarantees