***[PROCEDURES FOR DETERMINING INTEREST RATE CATEGORY]{.underline}***

(Pursuant to 7 CFR Parts 1710 and 1714)

THE THREE CATEGORIES APPLICABLE TO INSURED LOANS ARE AS FOLLOWS:

\(1\) ***[FIVE PERCENT HARDSHIP RATE:]{.underline}*** This section
allows qualifying under three methods: (A) standard eligibility
requirements;(B) passing an extremely \"high rates\" test; and (C) the
Administrator\'s Discretion.

> A. Under the standard Eligibility Requirements, two tests must be met
> (7 CFR 1714.8(1). They are outlined briefly:
>
> \(a\) **THE RATE DISPARITY TEST** - There are two parts to this test
> as follows: (A) The avg. rev. per kWh of the borrower from ALL
> CONSUMERS is at least 20 percent above the average for ALL UTILITIES
> in the STATE; and, (B) The avg. rev. per kWh from residential
> consumers, both seasonal and non-seasonal, of the borrower is at least
> 20 percent above the avg. for ALL UTILITIES in the STATE.
>
> \(b\) **THE CONSUMER INCOME TEST** - This is an \"Either/Or\"
> situation where the borrow can meet this test \"IF\" (A) The avg. per
> capita income of its residential consumers is LESS than the avg. per
> capita income in the STATE; OR, (B) The median household income of its
> residential consumers is lower than the median household income in the
> STATE.
>
> B. **HIGH RATES TEST:** To qualify under the \"extremely\" High Rates
> Test, a borrower\'s residential revenue per kWh must exceed 15.0 cents
> per kWh as set forth in 7 CFR 1714.8 (b).
>
> C. **ADMINISTRATOR\'S DISCRETION:** To seek this category, a borrower
> must follow the requirements in 7 CFR 1714.8(c).

\(2\) [***MUNICIPAL RATE CAPPED AT 7 PERCENT, WITH OR WITHOUT THE***
***CALL PROVISION***]{.underline}.

> To qualify under this section, the borrower can meet EITHER of two
> criteria:
>
> \(1\) Low Consumer Density Test: This test is met if the avg. number
> of consumers per mile is less than 5.50 (7CFR 1714.7(a);
>
> OR,
>
> \(2\) The borrower meets BOTH (a) Rate Disparity Test and (b) a
> Consumer Income Test (7 CFR 1714.7(b).

\(3\) ***[UNCAPPED MUNICIPAL RATE:]{.underline}*** Any application which
does not qualify for a hardship rate loan or the interest rate cap shall
be considered for an uncapped municipal rate loan.

***INFORMATIONAL REQUIREMENTS FOR***

***DETERMINING BORROWER ELIGIBILITY***

Before a loan application is submitted to RUS, a calculation is required
to determine what category of loan for which you qualify, ie, 100% RUS
hardship loan at 5%; 7% capped Municipal rate loan; or an uncapped
Municipal rate loan.

Please provide the following information which will be used as input
data in determining loan eligibility.

You may complete the information below and return to your RUS GFR. The
required information may be returned by mail, fax or Email. Mailing, fax
or Email address for the appropriate GFR may be found by accessing the
RUS Webpage at www.usda.gov/rus/home/home.htm.

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\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

***NAME OF BORROWER***
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

**[Name of County Served]{.underline} [No. Of Res. Cons.]{.underline}
[Name of County Served]{.underline} [No. Of Res. Cons.]{.underline}**

\(1\) (7)

\(2\) (8)

\(3\) (9)

\(4\) (10)

\(5\) (11)

\(6\) (12)

B. **DENSITY**, Consumers per mile (From latest Form 7)

C. **AVERAGE REVENUE PER kWh** (From year-end 1997 Form 7)

D. **RESIDENTIAL REVENUE/kWh** (From most recent year-end

Form 7, include sales to both season and

Non-seasonal consumers)

E. **AVERAGE RESIDENTIAL REVENUE PER/kWh** (From year-end

1997 Form 7)

Thank you for your assistance in completing and returning this
information. Please feel free to call if you have questions or wish to
discuss with your GFR.