U.S.

Rural Electrification: Adapting Business, Technology, and Government to Meet Local Needs
Presented by Commissioner Dennis OBrien Minnesota Public Utilities Commission

Electric Utility Types Have Significant Differences

Investor Owned (for profit) Federal non-profit (4 Power Marketing Authorities plus the Tennessee Valley Authority) State and local government non-profit (presently 2,010 in the US) Rural Electric Cooperatives (customer owned)

Characteristics of Utility Types

Buyers Trans. Investor 73 % 77 % Cooperative 12 % 6% Public 15 % 6% Federal ---11 % Non-Utility ------Distrib. Gen. Buyers/Mile 48 % 47 % 35 42 % 5% 7 7% 9% 47 3% 7% ------32 % ----

Rural Electrification In The 1930s Great Depression

90% of rural Americans did not have access to electricity Privately owned companies providing utility services did not find rural investment profitable Rural non-profit cooperatives lacked access to funds and often lacked essential engineering and managerial resources necessary to succeed

U.S. Rural Electrification Administration (REA) -- 1935

Provided low-cost loans and loan guarantees for cooperatives generation and distribution equipment Introduced modern construction methods, standardized equipment and introduced uniform procedures Made studies and distributed information to local cooperatives

Adaptation
1949 -- REA adds Rural telephone service to mission.
1994 -- REA became Rural Utility Services (RUS) within USDA Rural Development Bureau, along with Rural Business Cooperative Service and the Rural Housing Service. Each state now has a Rural Development Director and at least one office. RUS programs include: electric; telecommunications and broadband; and water and waste.

Rural Development Bureau Programs

Provide grants, direct loans, and loan guarantees Six (6) of thirty (30) are energy specific -- In one, the intermediate utility administers loans to others for economic development -- Three support liquid biofuels -- Two support purchase of energy efficiency and renewable fuel systems

Assessing Competitive Advantage

Availability: do resource maps indicate sufficient, reliable amounts to meet demand?
Demand: is it constrained by present or planned transmission; by income? Utility type: does the type of utility have incentive for this project? Transmission regulation: who gets reliable access and how? Is there congestion?

Overcoming Barriers
Investor-owned utilities may be induced to invest through tax incentives or by other means Publically owned utilities may be induced to support electrification if the same investment furthers goals for: -- clean water -- waste management -- telecommunications and/or -- other economic development

Reaching Areas With Low Customer Density

U.S. Rural Electrification Administration remains a practical model to provide sustained service to rural areas by providing customerowned cooperatives with:

funding technical and business tools and assessment information