[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1710.115]

[Page 109-110]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1710--GENERAL AND PRE-LOAN POLICIES AND PROCEDURES COMMON TO ELECTRIC LOANS AND GUARANTEES--Table of Contents
 
               Subpart C--Loan Purposes and Basic Policies
 
Sec. 1710.115  Final maturity.

    (a) RUS is authorized to make loans and loan guarantees with a final 
maturity of up to 35 years. The borrower may elect a repayment period 
for a loan not longer than the expected useful life of the facilities, 
not to exceed 35 years. Most of the electric facilities financed by RUS 
have a long useful life, often approximating 35 years. Some facilities, 
such as load management equipment and Supervisory Control and Data 
Acquisition equipment, have a much shorter useful life due, in part, to 
obsolescence. Operating loans to finance working capital required for 
the initial operation of a new system are a separate class of loans and 
usually have a final maturity of less than 10 years.
    (b) Loans made or guaranteed by RUS for facilities owned by the 
borrower generally must be repaid with interest within a period, up to 
35 years, that approximates the expected useful life of the facilities 
financed. The expected useful life shall be based on the weighted 
average of the useful lives that the borrower proposes for the 
facilities financed by the loan, provided that the proposed useful lives 
are deemed appropriate by RUS. RUS Form 740c, Cost Estimates and Loan 
Budget for Electric Borrowers, submitted as part of the loan application 
must include, as a note, either a statement certifying that at least 90 
percent of the loan funds are for facilities that have a useful life of 
33 years or longer, or a schedule showing the costs and useful life of 
those facilities with a useful life of less than 33 years. The useful 
lives proposed by the borrower for the facilities financed must be 
consistent with the borrower's proposed depreciation rates for these 
facilities. In states where the borrower must obtain state

[[Page 110]]

regulatory authority approval of depreciation rates for rate making 
purposes, the depreciation rates used for the purposes of this paragraph 
shall be the rates currently approved by the state authority or rates 
for which the borrower plans to seek state authority approval, provided 
that these rates are deemed appropriate by RUS. In other states, if the 
rates proposed by the borrower are not deemed appropriate by RUS, RUS 
will base expected useful life on the depreciation rates listed in 
Bulletin 183-1, or its successor, revising such rates as necessary to 
reflect current industry practice (for availability of bulletins, see 
Sec. 1710.5.). Final maturities for loans for the implementation of 
programs for demand side management and energy resource conservation and 
on and off grid renewable energy sources not owned by the borrower will 
be determined by RUS. Due to the uncertainty of predictions over an 
extended period of time, RUS may add up to 2 years to the composite 
average useful life of the facilities in order to determine final 
maturity.
    (c) [Reserved]
    (d) The Administrator may approve a repayment period longer than the 
expected useful life of the facilities financed, up to 35 years, if a 
longer final maturity is required to ensure repayment of the loan and 
loan security is adequate.
    (e) The final maturity of a loan established pursuant to the 
provisions of this section shall not be extended as a result of 
extending loan payments under section 12(a) of the RE Act.

[58 FR 66265, Dec. 20, 1993, as amended at 60 FR 3731, Jan. 19, 1995]