The New Republic: Rural Energy Is Especially Dirty and in Debt. Enter the Inflation Reduction Act.
Rural co-operatives, serving 42 million people, will soon get money to help them transition off coal.
Last week, a certain segment of academic economists lost their mind as the White House announced it would knock $10,000 off individual student loan debts, or $20,000 if borrowers are Pell Grant recipients. But another type of recently passed debt relief has attracted comparatively less attention and ire. Rural electric co-operatives—a living legacy of the New Deal’s efforts to bring power to the 90 percent of rural communities that still lacked it in the 1930s—will soon be able to take advantage of a new $9.7 billion program included in the Inflation Reduction Act that will help them finance a clean energy transition, escaping onerous debts that have kept many co-ops from getting off coal. Their newfound access to renewable energy tax credits—also furnished by the IRA—could be a game-changer, bringing more renewables to the 42 million who get their electricity from power providers they own.
Altogether, co-ops are estimated to be on the hook for about $100 billion in outstanding debt. Roughly $45 billion of that is held by the Agriculture Department’s Rural Utilities Service, according to an analysis of Freedom of Information Act documents obtained by campaigners. The RUS loans money to generation and transmission co-operatives, or G&Ts—themselves owned by co-ops that distribute power in their regions—to finance new power plants. Documenting the rest is difficult given a lack of transparency from co-ops, financial institutions, and the USDA. Much of it is believed to be held by co-operative banks, including the National Rural Electric Utilities Cooperative Financing Corporation and CoBank (according to their own disclosures in annual reports), as well as outside banks where some co-ops have refinanced their debts.
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Kate Aronoff is a staff writer at The New Republic. She is the co-author of A Planet To Win: Why We Need A Green New Deal (Verso) and the co-editor of We Own The Future: Democratic Socialism, American Style (The New Press).
Header Image: A front-end loader dumps coal at the East Kentucky Power Cooperative’s John Sherman Cooper power station near Somerset, Kentucky, on April 19, 2017.