A recent bipartisan infrastructure bill includes $5.2 billion for rural infrastructure projects in 26 states. Those funds include more than $232 million for Illinois projects and under the Electric and Infrastructure Loan program Menard Electric Cooperative was awarded a $23.475 million loan.
The loan will finance projects identified in our 2020-2023 Work Plan. This Work Plan is comprised of over 75 projects necessary to ensure the delivery of safe and reliable electric services vital to the continued viability of the communities we serve now and well into the future.
The Work Plan was presented to our Board of Directors in a sequence of meetings before a compliance package was then submitted to USDA’s Rural Utilities Services (RUS). RUS then performed a thorough engineering, environmental and financial review of the plan. They approved the plan and loan in July 2021 and it closed September 2021.
The Work Plan includes these projects (cost estimates as of June 2020):
• Building 12.4 line-miles for new electricity services ($1.3M)
• Upgrading 166.1 miles of existing power lines throughout the service territory ($14.25M)
• Upgrading circuit breakers at 11 substations ($780K)
• Upgrading and replacing other necessary equipment: 1,200 transformers, 2,000 meters, and varying numbers of capacitor banks, regulators, switches, sectionalizers, and security lights ($7.145M)
These improvements are necessary to our core mission of providing safe, reliable electric service to improve the lives of our members; the projects will improve existing reliability, take advantage of technological advances, and allow for modest growth across our system. The average age of much of our distribution system is about 40 years old.
As projects are completed and work orders are inspected and closed out, batch advances/withdrawals can be made from the available loan funds. In 2021, we advanced $1.75M to cover Work Plan projects that had been completed since July 2020. Additional funds will be advanced after projects are completed, and a financial need exists.
The first principal payment on the loan will be due in September 2023; interest will commence immediately. The traditional term on each advance is approximately 34 years. The last day we can draw from the loan is July 1, 2026. RUS does allow for two one-year extensions if projects are not completed within the initial 4-year period.
Menard Electric has been a RUS borrower since our formation in 1936. Recent loans included $17 million in 2014 to provide financing for Work Plan 2013-2017, $11 million in 2008, and $3.75 million in 1999. Costs of materials, equipment, labor, and transportation have continually risen as has the recognition of the need to rebuild and upgrade an aging system to ensure continued reliability.
In summary, Menard Electric Cooperative now has access to funding which will allow us to complete the upgrades and advancements identified in our current Work Plan and which are necessary to continue to ensure the safe and reliable operation of our distribution system.
Photo by Operations Manager Dalton Whitley