The check is no longer in the mail. It has been received.
A $75 million loan from the U.S. Department of Agriculture (USDA) to the Arkansas Electric Cooperative Corp. has been approved — received by electronic transmission, actually — and is now ready to be put to use to build out a fiber network across co-op territory in Arkansas.
The money was approved through the Electric Infrastructure Loan and Loan Guarantee Program and was first announced in June. The 2018 Farm Bill reauthorized this program.
The USDA loan will lead to a lot of grid modernization that will help businesses and residents in rural parts of the state, according to Buddy Hasten, CEO of the Arkansas Electric Cooperative Corp. and Arkansas Electric Cooperatives, Inc.
“We’ll be using this particular loan for a statewide fiber ring. So in the electric business, you hear terms like grid modernization, being able to communicate with all the assets in the field between headquarters, power plants, and our other equipment,” Hasten said.
While the primary focus will be a “smarter” grid, there will be excess fiber in the ring that can be utilized to expand broadband in the state for others. There will clearly be a benefit for the cooperative’s 500,000 members and 17 electric distribution cooperatives. Hasten said the fiber network could also be used to help rural schools and healthcare providers.“You think about COVID-19 and the digital divide between kids that live in the country, kids that live in the city, stories of co-ops that have created hotspots, either in their parking lots or in school buses so that rural schools and rural kids could do their homework and stuff. It’s a competitive world out there, and I think access to the Internet makes rural Arkansans more competitive,” he said.
David Branscum, Arkansas Rural Development State Director for the USDA, said the partnership with the Electric Cooperatives is money well-spent.
“When you’re dealing with the Electric Co-op, you know it’s a good project. They’re a worthy partner to always have because they’ve got their act together and they know what they’re doing,” said Branscum.
He also said there is more investment from USDA on the way. In the near future, details of a $151 million loan to the Arkansas Valley Electric Cooperative will be announced.
The fiber ring project will be managed internally by Robert McClanahan, vice president of information technology and chief technology officer for the Arkansas Electric Cooperative Corp. and Arkansas Electric Cooperatives, Inc. He predicts it will be about a 15-month project to complete.
Michael Henderson, CFO for the co-ops and president of Today’s Power, Inc., said the loan is for 30 years and has an interest rate one-eighth above “the cost of treasuries.” Right now, that translates to about a 1.2% interest rate.
“It’s really more economical than four [percent]. If we went out on our own with a startup fiber company, you’d be 4 to 4-1/2% [interest]. So it’s a big savings for rural America,” Henderson said.