Rural electrics oppose Senate farm bill ‘cushion of credit’ provision
As farm bill conferees prepare for a public meeting Wednesday, the National Rural Electric Cooperatives Association and its members are mounting what appears to be an uphill battle to convince conferees to drop or at least alter a provision in the Senate farm bill that would reduce the amount of interest that rural electric cooperatives get on money they have deposited with the Treasury Department to repay debt to the Rural Utilities Service.
The Senate farm bill would use the savings to fund other programs in the farm bill.
Under the current law, the co-ops are paid 5 percent interest on these escrow accounts known as the “cushion of credit,” but the Senate farm bill would change the rate to one based on five-year Treasury Department instruments, including on current deposits, and prevent future deposits.
In June, National Rural Electric Cooperatives Association CEO Jim Matheson wrote Senate Agriculture Committee Chairman Pat Roberts, R-Kan., and ranking member Debbie Stabenow, D-Mich., that the proposed change “would break the government’s commitment to RUS borrowers.”
Mathson also said that changing the program would increase costs for the electric co-ops and make it more difficult to keep rates as low as possible for some of the poorest electricity users in the country.
But the Senate went ahead anyway and rural co-ops have instead appealed to House Agriculture Committee Chairman Michael Conaway, R-Texas, to insist that the provision be removed or made less onerous. NRECA has made the cushion of credit its No. 1 priority, above even rural broadband.
One lobbyist described Roberts as “pretty dug in” on the issue, but said that rural electric co-operatives are appealing to Senate Majority Leader Mitch McConnell, R-Ky., because Kentucky co-ops have more money deposited with the treasury than co-ops in any other state except Georgia.
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The House Agriculture Committee on Thursday passed five bills including the Cattle Contract Library Act of 2021.