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Categories - Copywriting - Shopping - Free Online Business Help - Telecommunications Services Articles: Finance - The RUS Most of the people who are not involved in the power or energy industries are not familiar with the Rural Utility Service. The RUS, initially know as the REA or Rural Electrification Agency, was created under the FDR administration in 1935 to encourage the establishment of electrical power in rural areas. At the time of the REA’s creation, while electricity was widely used in cities, the United States was far behind Europe in providing electricity for its less populated areas. As with any business model, the revenue from sparsely populated areas did not justify the major investment involved and loans were too short-term to allow for revenue streams to cover financing at current interest rates. In order to provide power to these areas, companies would have had to charge prices that people could not afford or be willing to pay. The Constitution was also more strictly followed at the time and the government was not allowed to meddle in the affairs of private industry as much as it does today.
The RUS solved this problem by guarantying lower cost, longer-term loans for individuals and companies in rural areas that wanted to get into the power business. As a result, affordable rates were enabled that would also create good business projections. Co-ops and partnerships were formed and many investors, farmers, and other businessmen were attracted to the rural energy market. Ten years later, 40 percent of the country’s rural area had power. Shortly after WWII, the REA expanded its program to the telecommunications industry resulting in the vast communications network that exists today.
The economic stimulus and technological advancement that resulted from this are immeasurable. Without a communications and energy infrastructure covering the nation, we would most likely be considered a third world country now. The absence of these things is what is holding most developing nations back.
The RUS still serves the 1,700 independent telephone and power companies that exist today. With RUS assistance, subscribers in rural areas are able to have access to state of the art communications and power services that would, otherwise, not be available. Things like fiber optics, xDSL, and VOIP would not be as widely used and many companies producing these products would not exist.
The RUS has yet to be mentioned as a way to contribute to the solution of our current energy crisis, but it is enabling financing of the installation of solar and wind energy infrastructures in 34 states already. The rural areas that the RUS serves are ideal for these implementations. Farmers welcome the additional income from leases of small areas of their land for wind turbines and have found the turbines to be non-intrusive allowing them to farm and graze livestock right up to the base of the towers.
The additional income that the farmers are receiving, in many cases, is being spent on new farming equipment creating a stimulus of these industries. Previously dying small communities have been revitalized and are seeing population growth for the first time in decades.
There is no doubt that the RUS did and continues to offer a major benefit to the country. This was one bureaucracy that served its purpose well and Congress would be well served to pay it additional attention. A single percentage point off of the RUS’s guaranteed loans would have exponential benefits and farmers might well be supplying most of this country’s power soon as well as significantly reducing our dependence on foreign oil.
Copyright 2008 Web Smith
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