Why a rural electric cooperative wants cheaper federal financing
A rural electric cooperative is a utility that the people who buy power from it also own, and cooperatives run the power lines through much of rural America. Most of the money a cooperative spends on new power lines, substations and generating plants comes from one federal program, the Rural Utilities Service Electric Loan Program, which lends money at government set interest rates. That program is authorized to lend 7 billion dollars in 2026, and the National Rural Electric Cooperative Association, the cooperatives own trade group, says demand for those loans already exceeds that amount. Because of that shortfall, nearly 140 members of Congress signed 2 bipartisan letters asking appropriators to give the program the highest possible funding for fiscal year 2027, the government spending year that starts in October. Two other federal programs round out what cooperatives can borrow against. Empowering Rural America, called New ERA, is a 9.7 billion dollar grant and loan program, with about 7.3 billion dollars already awarded in a first round and about 1 billion dollars awarded in a second round. Powering Affordable Clean Energy, called PACE, is a 1 billion dollar loan program that partially forgives what a cooperative repays if it builds renewable energy or battery storage.
Show the numbers
| RUS loan program | 7 |
| New ERA | 9.7 |
| PACE | 1 |
The financial pressure behind the financing request
The National Rural Utilities Cooperative Finance Corporation, the nonprofit lender the cooperative sector itself owns, reported that 814 electric distribution cooperatives it covers stayed financially stable through 2025, with a median equity to asset ratio of 44%, a measure of how much of a cooperative property is paid for rather than borrowed, holding almost steady from 2024. A senior CFC official credited that stability to fiscal stewardship even as interest rates stayed elevated.
Despite elevated interest rates and inflation, they demonstrated strong fiscal stewardship and commitment to provide essential services to their communities.
Brad Captain, CFC senior vice president and chief corporate affairs officer. Source 2.
That stability sits alongside real construction bills. Oglethorpe Power Corporation has budgeted 3.3 billion dollars for the first of 2 new gas fired power plants, and Basin Electric Power Cooperative has budgeted 4 billion dollars for a 1,490 megawatt gas plant of its own. The average wait for a new distribution transformer, the equipment on a pole that steps voltage down for delivery to a building, has stretched to 340 days, up from 70 days before 2021, nearly 5 times as long by this calculation, so every one of those projects now takes longer and costs more to finish.
East Kentucky Power Cooperative 500 million dollar figure is converted here to 0.5 billion dollars to share 1 axis with the other 4, a conversion made for this article, not a figure source 3 states in billions.
Show the numbers
| Basin Electric | 4 |
| Oglethorpe Power | 3.3 |
| Kentucky cooperatives | 2 |
| Arkansas Electric | 1 |
| East Kentucky Power | 0.5 |
Other federal financing tools cooperatives are using now
A newer tool, called direct pay, lets a cooperative claim a federal tax credit as a straight cash payment instead of losing part of its value to a middleman investor, which is how most tax credits used to work for nonprofits that owe no federal income tax. North Carolina Electric Membership Cooperative received a 10.4 million dollar direct payment for a battery storage system, cutting that project total cost by more than 20%. Sierra Southwest, an Arizona cooperative subsidiary, expects a 40% investment tax credit on battery projects starting in 2026.
Cooperatives are pressing the case in Washington
Cooperatives own leaders are pressing this case directly to Congress.
Make no mistake, lawmakers want to hear from you. Your voice is powerful.
Louis Finkel, NRECA senior vice president of Government Relations. Source 1.
Christopher McLean, the Rural Utilities Service Assistant Administrator for Electric Programs, told cooperative leaders in 2025 where the agency stood on lending.
We are open for business.
Christopher McLean, Rural Utilities Service Assistant Administrator for Electric Programs. Source 5.
Whether the federal government keeps that door open at the scale cooperatives are asking for is now a fiscal year 2027 budget decision, not a settled fact.