Think KentuckyIn addition to state and local incentives, Kentucky’s Touchstone Energy Cooperatives may offer incentives for some projects such as an Economic Development Rider to lower electric rates as well as low-interest loans through the Rural Economic Development Loan and Grant Program.  For more information on these Kentucky’s Touchstone Energy Cooperatives’ Incentive Programs, please see below. For additional information on state incentives, please click the ThinkKentucky logo.

Economic Development Rider

An Economic Development Rider (EDR) is used for certain types of projects that require substantial amounts of electricity on a consistent basis.  If the project meets certain power usage requirements, the customer may be able to utilize the rider to minimize their electric rates for a set period of time for new or expanding businesses within our service territories.

  • Available to qualifying non-residential customers (Commercial and Industrial); both new customers or expanding existing customers are eligible.
  • Service under Generation Rates B, C, E, and G.
    • Tariff minimum contract loads for Rates B and C is 500 kW.
    • Loads between 250 kW and 500 kW would be under Rate E.
    • Rate G is usually applied to large loads in excess of 15,000 kW.
  • A special contract is required and subject to Public Service Commission approval.
    • The negotiated special contract will contain the specific terms and conditions of the incentive, not the tariff.
  • Monthly Billing Load
    • Minimum average monthly billing load of 500 kW over a 12-month period in counties not designated as Enhanced Incentive County (PDF).
    • If locating in a county designated as an “Enhanced Incentive County (PDF)” then minimum average monthly billing load reduced to 250 kW over a 12-month period.
    • Enhanced Incentive County (PDF)” determined by Cabinet for Economic Development and updated annually.
    • For existing customers, minimum average monthly billing load is above customer’s previous 3 years’ monthly billing loads.
    • A new customer is defined as one who becomes a customer of the Distributor on or after January 1, 2013.
  • Minimum Load Factor
    • Minimum load factor of 60% required for either new or expanding existing customers during the discount period.
    • To allow for “ramp up” of operations, minimum load factor requirement waived for first 12 months of discount period.
    • During remaining months of discount period, load factor will be determined monthly.
    • During remaining months of discount period, customer may fail to achieve 60% load factor 1/6th of the remaining months of the discount period.
      • Example:  For a 5-year discount period, first 12 months is waived and failure to meet 60% load factor is allowed for 8 more months (60 months – first 12 months = 48 months x 1/6 = 8 months).
    • In any month the customer fails to meet 60% load factor beyond the 1/6th allowance, the discount to the Total Demand Charge will be suspended for that month.
    • After the suspension, the discount to the Total Demand Charge will resume in any month where the customer achieves a 60% load factor.  However, suspension does not lengthen the discount period of the contract.
      • Example:  A customer with a 5-year discount period fails to meet the 60% load factor in 4 months of the 2nd year and 4 months of the 3rd year – the allowed 8 months. Failure to meet 60% load factor in any month of the 4th and 5th years will result in suspension of the discount for that month. Achieving 60% load factor in any month in the 4th or 5th years will restore the discount at the appropriate discount rate.
  • Contract Term and Discount Periods
    • The term of the special contract must be double the discount period and the maximum discount period is 5 years.
    • We believe flexibility is needed, and proposes to offer discount periods of 3, 4, or 5 years; results in contracts with terms of 6, 8 , or 10 years.
    • 3-year discount period has percentages of 30% for first 12 months, 20% for next 12 months, and 10% for final 12 months.
    • 4-year discount period has percentages of 40% for first 12 months, 30% for next 12 months, 20% for next 12 months, and 10% for final 12 months.
    • 5-year discount period has percentages of 50% for first 12 months, 40% for next 12 months, 30% for next 12 months, 20% for next 12 months, and 10% for final 12 months.
    • Percentage reduction is applied to the Total Demand Charge (sum of all applicable demand charges before the EDR is applied).
    • Regular tariff rates charged after the end of the discount period and for remainder of the contract term; regular tariff rates will be charged in months when the customer fails to meet the minimum 60% load factor requirement.
    • The discount will not be smaller than the amount calculated from the Generation rates.
      • Demand charge rates for Generation and Distribution are not the same.
      • Generation billing demand is based on system-wide coincident peak while Distribution billing demand generally is based on the highest average rate that energy is used during on-peak periods for that Distributor.
      • A larger discount based on the Distributor’s demand charge could be considered during special contract negotiations.

For more details on the Economic Development Rider, please contact our economic development team members.

RURAL ECONOMIC DEVELOPMENT LOAN AND GRANT (REDLG)

This United States Department of Agriculture (USDA) program provides funding to rural projects through local utilities. There are two types of funding: Rural Economic Development (RED) Loans and RED Grants.

Under the RED Loan program, USDA provides zero percent interest loans to local utilities that may in turn loan at very low interest rates to local businesses and qualified non-profits (ultimate recipients) for projects that will create and retain employment in rural areas. Recipients repay the lending utility directly. The utility is responsible for repayment to USDA.

Under the RED Grant program, USDA provides grant funds to local utility organizations that use the funding to establish revolving loan funds. Loans are made from the revolving loan fund for projects that will create or retain rural jobs. When the revolving loan fund is terminated, the grant is repaid to the Agency.

What types of projects are eligible?

  • Examples of eligible projects include:
    • Capitalization of revolving loan funds
    • Technical assistance in conjunction with projects funded under a zero interest RED Loan
    • Business Incubators
    • Community Development Assistance to non-profits and public bodies (particularly job creation or enhancement)
    • Facilities and equipment for education and training for rural residents to facilitate economic development
    • Facilities and equipment for medical care to rural residents
    • Telecommunications/computer networks for distance learning or long distance medical care

Graphic "What Does REDLG Fund?" Between 2011-2014, More than half of the $221.1 million awarded to co-ops under the USDA Rural Economic Development Loan and Grant program wen ttowards business expansion or small projects.

For More Information: http://www.rd.usda.gov/programs-services/rural-economic-development-loan-grant-program

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