High Energy Cost Grants

What this funds

This page was intentionally left blank. This publication summarizes the fiscal year (FY) 2027 Budget for the U.S. Department of Agriculture (USDA). Throughout this publication any reference to the "Budget" is in regard to the 2027 Budget, unless otherwise noted. All references to years refer to fiscal year, except where specifically noted. The budgetary tables throughout this document show actual amounts for 2024 and 2025; Working Families Tax Cut Act; Agriculture, Rural Development, Food and Drug Administration, and Related Agency Appropriations Act, 2026; and the President's Budget request for 2027. Amounts for 2026 information technology investment levels, recovery levels, transfers in and out, balances available end Throughout this publication, the Working Families Tax Cut Act is used to refer to the Public Law 119- Pursuant to the Balanced Budget and Emergency Deficit Control Act of 1985, sequestration is included In tables throughout this document, amounts equal to zero (0) are displayed as dashes (-). Amounts less than 0.5 and greater than zero are rounded and shown as a zero (0). This display treatment is used to prevent the masking of small non-zero amounts that do not round up to one (1). Due to The USDA Rural Utilities Service (RUS) enhances the quality of life and improves economic opportunity in rural communities by providing financing for the basic infrastructure of modern life. Electricity, telecommunications, and water and waste systems are essential services for individuals and businesses alike that assist communities with creating wealth, supporting self-sustaining and repopulating communities, and helping to improve rural economies. Direct Loans -- Authorized by section 4 of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 904) and bear interest at the government's cost of money (or the current Treasury rate). The program's purpose is to finance electric distribution, transmission, and generation systems, and for demand side management, energy efficiency and conservation programs, and renewable energy Hardship Rate Direct Loans -- Authorized by section 4 of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 904) to finance electric system improvements for qualified borrowers that meet thresholds for retail rate disparity and for customer per capita and household incomes, or that have suffered a severe, unavoidable hardship, such as a natural disaster. No private financing is required. Hardship rate loans at a fixed rate of five percent are also offered under section 305 of the Rural Municipal Rate Direct Loans -- Authorized by section 305 of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 935) to finance the electric system improvements of eligible distribution borrowers. Interest rates are set quarterly based on municipal bond market rates for similar maturities and determined at time of each loan advance. Private financing of 30 percent of the total loan is required for most projects. Guaranteed Loans -- Authorized by section 306 of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 936) to finance electric distribution, transmission, and generation systems (including renewable energy), headquarters facilities, and programs for energy efficiency, conservation, and demand side management. The Federal Financing Bank (FFB) is the primary source of guaranteed loans and fixes interest rates to the prevailing cost of money to the Treasury, plus an administrative fee of one eighth of one percent. USDA-guaranteed private loans issued through National Rural negotiated between the lender and the borrower. Guarantees for Bonds and Notes Issued for Utility Infrastructure Loans -- Authorized by section 313A of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 940c-1), to guarantee payments on certain bonds or notes issued by qualified cooperative or other non-profit lenders. The note proceeds must be used for financing eligible utility infrastructure and must be of investment grade. Notes have been obtained through the FFB with interest rates equal to the Treasury rate for notes of similar maturities plus an annual fee of 30 basis points on any unpaid principal balance. Energy Efficiency and Conservation Loan Program -- Authorized by section 317 of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 940g) to finance facilities that generate electricity from solar, wind, hydropower, biomass, or geothermal source for resale to rural and nonrural residents. Annual appropriations acts have included a provision to exempt the interest rate requirement for this program. USDA administers the program under the Direct Loan FFB authority under Section 306 of the Rural Electrification Act of 1936, as amended, (7 U.S.C. 936). Rural Energy Savings Program -- Authorized by section 6407 of the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 8107), as amended, to offer zero-interest loans to eligible borrowers for relending to qualified consumers to implement durable cost-effective energy efficiency High Energy Cost Grants -- Authorized by section 19 of the Rural Electrification Act of 1936 (7 U.S.C. 918a) to fund energy generation, transmission, and distribution facilities, including energy efficiency and conservation programs and renewable energy systems serving rural communities with average home energy costs exceeding 275 percent of the national average. Program funds are also used for RUS grants to the Denali Commission to carry out eligible projects in small remote villages in Alaska and to eligible State entities to establish revolving funds for bulk fuel purchases for certain communities where fuel deliveries by surface transportation is not available year-round. Empowering Rural America (New ERA) Program - Authorized by Section 22004 of the Inflation Reduction Act of 2022 (P.L. 117-169) to assist eligible entities in achieving the greatest reduction in Greenhouse Gas (GHG) emissions while advancing the long-term resiliency, reliability, and affordability of rural electric systems. The program provides loans, grants and loan and grant combinations to member-owned rural electric cooperatives to help rural Americans transition to clean, affordable, and reliable energy. By reducing air and water pollution, New ERA funding improves health outcomes and lowers energy costs for people in rural communities. Powering Affordable Clean Energy (PACE) Program - Authorized by Section 22001 of the Inflation Reduction Act of 2022 (P.L. 117-169) to finance projects that store electricity generated from eligible renewable energy sources listed under Section 317 of the Rural Electrification Act of 1936. This program provides loans for wind, solar, hydropower, geothermal, or biomass renewable energy projects. PACE allocates funding across three categories of applicants that can qualify for up to 60 percent total loan forgiveness for designated energy communities or Tribal populations.

Extracted from Rural Utilities Service, p. 57. Verbatim; nothing here is paraphrased.

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