Source: https://www.federalregister.gov/documents/2013/06/05/2013-13309/rural-determination-and-financing-percentage
Timestamp: 2016-09-26 03:51:48
Document Index: 327596374

Matched Legal Cases: ['§\u20093', '§\u2009212', 'art2', '§\u20091710', '§\u20091710', 'art3', '§\u20091710', 'art4', '§\u20091710', '§\u20091710', '§\u20091710', 'art5', '§\u20091710', '§\u20091710', '§\u20091710', 'art6', '§\u20091710', '§\u20091710', '§\u20091710', '§\u20091710', '§\u20091710', '§\u20091710', 'art7', '§\u20091710', '§\u20091710', 'art8', '§\u20091710', '§\u20091710', '§\u20091710', '§\u20091710', 'art9', '§\u20091710', 'art10', '§\u20091710', '§\u20091710', 'art11', '§\u20091710', 'art12', '§\u20091710']

:: Rural Determination and Financing Percentage
33757-33764
Subpart D—Basic Requirements for Loan Approval Subpart F—Construction Work Plans and Related Studies Subpart F—Construction Work Plan and Related Studies Enhanced Content - Table of Contents Enhanced Content - Submit Public Comment
https://www.federalregister.gov/d/2013-13309
Comments are invited on (a) whether the collection of information is necessary for the proper performance of the functions of the Agency, including Start Printed Page 33758whether the information will have practical utility; (b) the accuracy of the Agency's estimate of burden including the validity of the methods and assumption used; (c) ways to enhance the quality, utility and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques on other forms or information technology.
This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. The Agency has determined that this proposed rule meets the applicable standards in § 3 of the Executive Order. In addition, all state and local laws and regulations that are in conflict with this rule will be preempted, no retroactive effort will be given to this rule, and, in accordance with § 212(e) of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 6912(e)), administrative appeals procedures, if any, must be exhausted before any action against the Department or its agencies may be initiated.
For purposes of this discussion, “June 2008 rural area” refers to the geographic area served by borrowers that had an outstanding RUS loan as of June 18, 2008 (such borrowers hereinafter referred to as “existing borrowers”). Rural electric cooperatives, public utility districts, tribal utility authorities, municipalities and other eligible organizations that were existing borrowers as of June 18, 2008, and which have not since experienced any growth in their service areas via acquisition or merger are 100 percent Start Printed Page 33759rural per the definition of rural area referenced in the RE Act as amended by the 2008 Farm Bill (Pub. L. 110-246). It is the borrower's June 2008 rural area that is grandfathered and not a borrower that had an outstanding RUS loan as of June 18, 2008 (defined in the proposed rule as “June 2008 Borrower.”). To the extent these borrowers have acquired additional territory by acquisition or merger since June 18, 2008, the additional area will be separately reviewed to determine whether it is rural. The current definition of rural area for purposes of the RE Act provides that an area other than a city, town, or unincorporated area that has a population greater than 20,000 is defined as rural.
Method R1 This method may be used when the meter locations are known, and, in most cases, the utility will have the data available in shape files utilized by geographic information software (“GIS data”). GIS data are used to overlay meter locations onto population maps available from the United States Census Bureau (Census Bureau) to determine how many meters are located in rural areas and how many are located in urban areas. The Rural Percentage under this method is calculated as rural meters divided by total meters.
Method R2 This method is similar to Method R1 but it also takes load into account as a proxy for population. Load can be either energy sold measured in megawatt hours (MWh) or coincident peak demand as measured in megawatts (MW), as measured within the service area during the most recently completed calendar year. As with Method R1, GIS data allow the utility to determine which meters are rural and which are urban, but the Rural Percentage under this method is calculated as rural load divided by total load.
Method R3 This method is to be used only when the service area is known, but the exact locations of meters are not known. The area is identified on a map with landmarks such as highways, rivers, cities, etc. The Web site for the Census Bureau is used to identify areas within the service area with a population of greater than 20,000 as well as the total population for the service area. The Rural Percentage is calculated using an estimated total population and known urban population using population and housing data from the Census Bureau as well as information from other sources acceptable to RUS and may incorporate reasonable assumptions when all facts are not available. The Rural Percentage using this method shall be equal to the fraction that results from dividing the rural population by the total population.
Method R4 This method looks at load flows in and around the actual location of a proposed generating plant. A boundary, or polygon, is determined which coincides with the area beyond which power from the proposed plant does not flow during low consumer demand conditions. Low consumer demand in this case is when power from Start Printed Page 33760the outside must be imported to meet the total demand in this geographic area. This boundary is consistent with the presumption that all of the power generated from the plant is consumed within this area during low consumer demand conditions. This method should only be used for projects serving loads that are approximately 50 MW or less located in rural areas.
Method G1 Multiply the Rural Percentage by the coincident peak demand recorded for the utility system during the most recently completed calendar year. The result of this calculation is a Rural Cap measured in MW. In the case of a nonprofit utility it is proposed that RUS may provide 100 percent of the debt for a given energy asset or fleet of assets until the cumulative nameplate capacity financed by RUS reaches this Rural Cap. In the case of a for-profit utility it is proposed that RUS may provide 100 percent of the debt for a given energy asset or fleet of assets until the cumulative capacity financed by RUS reaches the lesser of this Rural Cap, the state's RPS target, or 20 percent of the utility's coincident peak, as measured in MW.
Method G2 Multiply the Rural Percentage times the total energy sold in the system as measured during the most recently completed calendar year. This calculation would result in a Rural Cap measured in energy hours. In the case of a nonprofit utility it is proposed that RUS may provide up to 100 percent of the debt for a given energy asset or fleet of assets until the cumulative energy financed by RUS reaches this Rural Cap. In the case of a for-profit utility it is proposed that RUS may provide up to 100 percent of the debt for a given energy asset or fleet of assets until the cumulative energy financed by RUS reaches the lesser of this Rural Cap, the state's RPS target or 20 percent, as measured in MWh.
Method G3 Multiply the Rural Percentage times the total project cost for a specific asset. This would result in a maximum financing cap measured in dollars for each asset. It is proposed that RUS provide financing for no more than this amount of debt; the balance of the costs would come from either equity or additional lenders or a combination of both. (This method is the approach currently used by the Agency in determining the Financing Percentage.)
Method D1 The Financing Percentage is proposed to be equal to the Rural Percentage as determined by Methods R1, R2, or R3 above. All projects in the system may be financed up to this percentage regardless of physical location.
Method D2 The Financing Percentage is proposed to be 100 percent of the costs of the projects located in rural areas; the Financing Start Printed Page 33761Percentage would be zero for projects located in urban areas.
Method EE1 The Financing Percentage is proposed to be 100 percent of the costs of the projects located in rural areas; the Financing Percentage would be zero for projects located in urban areas.
Method T1 The rulemaking proposes a Financing Percentage of 100 percent for a transmission investment only in the following cases: a transmission project wholly owned by an existing utility system borrower(s), 100 percent of a fractional interest owned by an existing borrower, or 100 percent of the lines needed to meet the investment requirements imposed on an existing borrower as a member of an integrated transmission system.
Method T2 For other than existing borrowers, it is proposed that RUS will finance a percentage of the applicant(s) financial commitment to a transmission investment equal to the Rural Percentage using methods R1, R2 or R3 above. The applicant must be a Sponsoring Utility for determining the Rural Percentage.
Start Amendment Part2. Amend § 1710.2 by adding definitions for “June 2008 Borrower,” ” Sponsoring Utility,” and “Utility” in alphabetical order to read as follows:End Amendment Part
§ 1710.2 Definitions and rules of construction.
Start Amendment Part3. Amend § 1710.101 by revising paragraph (f) to read as follows:End Amendment Part
Types of eligible borrowers. * * * * *
(f) Except as provided in paragraph (g) of this section, former borrowers that have paid off all outstanding loans may reapply for a loan to serve RE Act beneficiary loads accruing from the time Start Printed Page 33762the former borrower's complete loan application is received by RUS. * * * * *
Start Amendment Part4. Amend § 1710.104 by revising paragraph (b) to read as follows:End Amendment Part
§ 1710.104
Service to non-RE Act beneficiaries. * * * * *
(b) Loan funds may be approved for facilities that serve non-RE Act beneficiaries only if: (1) The primary purpose of the loan is to furnish or improve service for RE Act beneficiaries; and (2) The use of loan funds to serve non-RE Act beneficiaries is necessary and incidental to the primary purpose of the loan; or (3) The requirements of §§ 1710.116 and 1710.117 of this subpart are satisfied. Start Amendment Part5. Add § 1710.116 to read as follows:End Amendment Part
§ 1710.116
Rural Determination. (a) General. This section shall be used to determine the rural eligibility for all applicants. Borrowers serving, directly or indirectly, any person located within a rural area, shall be considered eligible for financing as provided in this section and § 1710.117. (b) Rural Cap. Rural Cap means the aggregate amount of generation in megawatt hours (MWh) that RUS will finance for a given Utility. The amount may be measured in terms of either installed capacity or annual energy sales. (c) Rural Percentage. Except as provided in paragraph (d) of this section, the percentage of rural persons served relative to the total population in the service territory of a Utility shall be considered to be the Rural Percentage. RUS retains the ultimate authority for determining the Rural Percentage and the Rural Percentage shall be re-evaluated with each loan request. (d) June 2008 Borrowers. The Rural Percentage for June 2008 Borrowers that have not acquired any new service territory since June 18, 2008 shall be 100 percent. (e) Report and supporting documentation. It is the Borrower's responsibility to work with the applicable Utility to estimate the Rural Percentage and provide RUS with a report acceptable to RUS estimating the Rural Percentage. The report and supporting documentation must be verifiable by RUS or a third party acceptable to RUS. (f) Methods for calculating the Rural Percentage. The borrower may use any one of the following four methods to estimate the Rural Percentage, except as otherwise noted. (1) Method R1 Identify all meters currently located within the service territory for the applicable Utility excluding sale for resale meters. Determine the rural meters and total meters using data on meter locations in the format utilized by geographic information software (GIS) and using data available from the Census Bureau. The Rural Percentage shall be equal to the fraction that results from dividing the number of rural meters by the number of total meters. (2) Method R2 Identify all meters located within the service territory for the applicable Utility excluding sale for resale meters. Determine the rural meters and total meters for the area using data available from the Census Bureau. Determine the rural, and total MWh sold during the previous calendar year. The Rural Percentage shall be equal to the fraction that results from dividing the number of rural MWh by the total MWh sold. Borrowers may use peak demand (megawatts) in place of MWh sales to calculate the rural fraction. (3) Method R3 Identify the geographic area of the service territory for the applicable Utility using landmarks such as highways, rivers or boundaries of political jurisdictions. Determine the urban and total population for the area using data available from the U.S. Bureau of the Census (Census Bureau). Additional data from other sources acceptable from RUS may also be used to refine the result arrived at using Census Bureau data. The Rural Percentage shall be equal to the fraction that results from dividing the rural population by the total population. This method is only to be used if GIS data on meter locations is not available. (4) Method R4 (i) This method may only be used for small generation projects that serve loads approximately 50 megawatts (MW) or less and are located in a rural area, at least 10 miles from an urban center, or for small generation projects that are located in an urban area where a benefit can be clearly demonstrated for a rural area such as a project that results in relief of congestion at a constrained delivery point that feeds a rural area. (ii) Perform a load flow study in and around a proposed generation plant site. Identify a boundary which coincides with the geographic area beyond which power from the proposed plant does not flow during low consumer demand conditions. Use either Methods R1, R2 or R3 to determine the Rural Percentage for the identified area. Start Amendment Part6. Redesignate § 1710.117 as § 1710.118, and add a new § 1710.117 to read as follows:End Amendment Part
§ 1710.117
Financing Percentage. (a) General. This section shall be used to determine the eligible percentage of financing for projects included in loan applications submitted to RUS. (b) Financing Percentage. Projects serving persons in rural areas shall be eligible for financing from RUS for up to 100 percent of eligible costs or such other lower percentage as provided in this section unless otherwise reduced pursuant to either an equity or other underwriting requirement determined by RUS, including but not limited to a requirement that other lenders participate in the financing. The percentage of total project costs determined to be eligible for RUS financing shall be the Financing Percentage. (c) June 2008 Borrowers. The Financing Percentage for June 2008 Borrowers shall be 100 percent limited only by an underwriting requirement as may be determined by RUS pursuant to paragraph (b) of this section. (d) Generation. The following three options may be used for determining the maximum Financing Percentage for generation projects. Applicants must provide RUS with estimates and support documentation for the option selected by the applicant. The percentage of generation capacity or energy financed in all or part by RUS for utility systems other than June 2008 Borrowers may not exceed the applicable Rural Cap. (1) Method G1. Multiply the Rural Percentage times the coincident peak demand recorded for the applicable Utility service area as measured during the most recently completed calendar year. RUS may provide up to 100 percent of the debt for a given generation asset or fleet of assets until the cumulative nameplate capacity financed by RUS reaches the Rural Cap for a nonprofit utility system. RUS may provide up to 100 percent of the debt for a given generation asset or fleet of assets until the cumulative nameplate capacity financed by RUS reaches the lesser of the Rural Cap, the applicable state renewable portfolio standard or 20 percent of the coincident peak as measured in megawatts for a for-profit utility system. (2) Method G2. Multiply the Rural Percentage times the total energy sold within the system for the most recently completed calendar year. The result is a Rural Cap measured in energy hours. RUS may provide up to 100 percent of the debt for a given generation asset or fleet of assets until the cumulative Start Printed Page 33763capacity financed by RUS reaches the Rural Cap for a nonprofit utility system. RUS may provide 100 percent of the debt for a given generation asset or fleet of assets until the cumulative capacity financed by RUS reaches the lesser of the Rural Cap, the applicable state renewable portfolio standard or 20 percent as measured in energy hours for a for-profit utility system. (3) Method G3. Multiply the Rural Percentage times the total project cost for a specific asset. This establishes the maximum financing cap measured in dollars for each asset. RUS may provide financing for no more than this amount of the debt. (e) Transmission. Transmission that is dedicated to interconnecting a specific generation facility shall be considered incidental to and part of that project for purposes of determining the related Financing Percentage and as such be calculated pursuant to paragraph (d) of this section. The following two options may be used for determining the maximum Financing Percentage for stand-alone bulk or other interconnecting transmission lines. Applicants must provide RUS with estimates and support documentation for the option selected by the applicant. (1) Method T1 June 2008 Borrowers may seek financing for 100 percent for a transmission investment only in the following cases: a transmission project wholly owned by existing borrower(s), 100 percent of a fractional interest owned by an existing borrower, or 100 percent of the lines needed to meet the investment requirements imposed on an existing borrower as a member of an integrated transmission system. (2) Method T2 In cases where the applicant is not a June 2008 Borrower, RUS will finance a percentage of the applicant(s) financial commitment to a transmission investment equal to the Rural Percentage using methods R1, R2 or R3 of paragraph (f) in § 1710.116. The applicant must be a Sponsoring Utility for determining the Rural Percentage. (f) Distribution. Applicant must provide RUS with estimates and support documentation for one of the following two options for determining the maximum Financing Percentage for distribution projects. (1) Method D1 The Financing Percentage is equal to the Rural Percentage as determined by Methods R1, R2, or R3 described in paragraph (f) of § 1710.116. All projects in the system may be financed up to this percentage regardless of physical location. (2) Method D2 The Financing Percentage may be up to 100 percent of the costs of the projects located in rural areas; the Financing Percentage would be zero for projects located in urban areas. (g) Financing Percentage for Energy Efficiency Projects. Applicants must provide RUS with estimates and support documentation for determining the maximum Financing Percentage using the following method for energy efficiency projects: Method EE1 The Financing Percentage may be up to 100 percent of the costs of the projects located in rural areas; the Financing Percentage shall be zero for projects located in urban areas. Start Amendment Part7. Amed § 1710.119 by revising paragraph (b) to read as follows:End Amendment Part
§ 1710.119
Loan processing priorities. * * * * *
(b) The Administrator may give priority to processing loans that are required to meet the following criteria: (1) To restore electric service following a major storm or other catastrophe; (2) To bring existing electric facilities into compliance with any environmental requirements imposed by Federal or state law that were not in effect at the time the facilities were originally constructed; (3) To finance the capital needs of borrowers that are the result of a merger, consolidation, or a transfer of a system substantially in its entirety, provided that the merger, consolidation, or transfer has either been approved by RUS or does not need RUS approval pursuant to the borrower's loan documents (See 7 CFR 1717.154); (4) To correct serious safety problems, other than those resulting from borrower mismanagement or negligence; (5) To finance generation facilities that use renewable fuel; or (6) To build transmission facilities in order to deliver the energy produced by generating facilities that use renewable fuel. * * * * *
Subpart D—Basic Requirements for Loan Approval Start Amendment Part8. Amend § 1710.151 by revising paragraph (e) to read as follows:End Amendment Part
§ 1710.
151 Required finding for all loans. * * * * *
(e) Facilities for nonrural areas. Whenever a borrower proposes to use loan funds for the improvement, expansion, construction, or acquisition of electric projects for non-RE Act beneficiaries, there is satisfactory evidence that such funds are necessary and incidental to furnishing or improving electric service for RE Act beneficiaries (see § 1710.104) or the requirements of §§ 1710.116 and 1710.117 are satisfied. * * * * *
Subpart F—Construction Work Plans and Related Studies Start Amendment Part9. Amend § 1710.251 by revising paragraphs (c)(8) through (c)(10) to read as follows:End Amendment Part
Construction work plans—distribution borrowers. * * * * *
(c) * * * (8) Headquarters facilities; (9) Improvements, replacements, and retirements of generation facilities; (10) Smart grid facilities including communications equipment, smart meters, load management equipment, automatic sectionalizing facilities, and centralized System Control and Data Acquisition equipment. Load management equipment and other smart devices eligible for financing, including the related costs of installation, is limited to capital equipment designed to influence the time and manner of consumer use of electricity, which includes peak clipping and load shifting. To be eligible for financing, such equipment must be owned by the borrower, although it may be located inside or outside a consumer's premises; and * * * * *
Start Amendment Part10. Amend § 1710.252 by revising paragraphs (c) (2) and (c)(4) to read as follows:End Amendment Part
Construction work plans—power supply borrowers. * * * * *
(c) * * * (2) Transmission facilities required to deliver the power needed to serve the existing and planned new loads of the borrower and its members, and to improve service reliability, including tie lines for improved reliability of service, line conversions, improvements and replacements, new substations and substation improvements and replacements, and smart grid facilities such as Systems Control and Data Acquisition equipment, including automated dispatching, communications and sectionalizing equipment, and load management equipment; * * * * *
(4) Improvements and replacements of generation facilities, including generation facilities that use renewable fuel; and * * * * *
Subpart F—Construction Work Plan and Related Studies § 1710.253
[Amended] Start Amendment Part11. Amend § 1710.253 as follows:End Amendment Part
Start Amendment Parta. Revise paragraph (c)(1) and redesignate pargraphs (c)(2) through (c)(9) as (c)(3) through (c)(10), respectively, and add a new paragraph (c)(2); and End Amendment Part
Start Amendment Partb. Redesignate paragraph (d) as paragraph (e) and add a new pargraph (d); End Amendment Part
Engineering and cost studies—addition of generation capacity. * * * * *
(c) * * * (1) Capital; (2) Operation and maintenance costs; * * * * *
(d) The requirements of paragraphs (c)(4), (c)(5), and (c)(6) of this section shall not apply in the case of generation projects using renewable fuel that are proposed to meet a renewable portfolio standard imposed by the applicable jurisdictional authority. Start Amendment Part12. Amend § 1710.254 by adding paragraph (a)(1)(iii) and revising paragraphs (g) and (h) to read as follows:End Amendment Part
Alternative sources of power. (a) * * * (1) * * * (iii) Where a generation project using renewable fuel is proposed to meet a renewable portfolio standard imposed by the applicable jurisdictional authority. * * * * *
(g) The requirements of this section supplement the RUS requirements for financing of generation and bulk transmission facilities as set forth elsewhere in this part. (h) At the request of a borrower, RUS, in its sole discretion may waive specific requirements of paragraphs (b) through (e) of this section if such waiver is required to prevent unreasonable delays in obtaining generation capacity that could result in system reliability problems, or, in the case of renewable projects proposed to meet a renewable portfolio standard imposed by the applicable jurisdictional authority, the requirements of this section shall be deemed to be met. Start Signature
Dated: May 30, 2013. John Padalino, Acting Administrator, Rural Utilities Service.
[FR Doc. 2013-13309 Filed 6-4-13; 8:45 am] BILLING CODE 3410-15-P Published Document Home