U.S. Department of Agriculture announces $9.7 billion in funding for rural electric cooperatives through Empowering Rural America Program

Key Takeaways

On May 16, the U.S. Department of Agriculture’s (USDA) Rural Utilities Service (RUS) announced a notice of funding opportunity (NOFO) for the Empowering Rural America (New ERA) Program. Established in the Inflation Reduction Act (IRA), the $9.7 billion New ERA Program aims to help rural electric cooperatives transition to clean, affordable and reliable energy. Although counties are not directly eligible for this funding, rural counties will benefit significantly from this program, given the critical role that rural electric coops play as electricity providers in rural communities. The portal to apply for this funding will open on July 31, 2023, and the process will begin with a letter of intent (LOI) due by August 31, 2023.

To be eligible to receive funding through the program, interested applicants must meet one of the following criteria:

• Current or previous borrowers of the USDA Rural Utilities Service (RUS).
• Borrowers of the former Rural Electrification Administration.
• Rural electric cooperatives that primarily serve rural regions.
• Wholly or jointly owned subsidiaries of rural electric cooperatives.

In addition, at least 50 percent of the eligible cooperative’s customer base must be rural residents. In this program, rural is defined as any unincorporated area, city or town with less than 50,000 residents. From those who qualify, the RUS will split applicants into three categories to ensure fair competition. The three categories are:

• Total utility plant value equal to or more than $500 million
• Total utility plant value of more than $200 million and less than $500 million
• Total utility plant value equal to or less than $200 million

Applicants will be eligible to receive up to $970 million in funding in loans, grants, or loan refinancing through the program, and can indicate which funding mechanism they would prefer in their LOI.

Rural counties face distinct energy challenges due to factors such as low population density and isolation from larger electric systems. Rural electric cooperatives play a crucial role in rural counties by providing access to reliable and affordable electricity in areas underserved by traditional utility companies due to a lack of market incentives. They contribute to economic development, support essential services like healthcare and education, and improve the overall quality of life for residents in these areas. NACo will continue to advocate for initiatives like the New ERA program that help rural counties and the communities we serve to thrive.