Rural Energy

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The Obama Administration will be giving grants to help small businesses, ranchers and farmers in Arizona install renewable energy systems or make energy efficient improvements. Ten Arizona rural businesses will be given the Rural Energy for America Program grants. Arizona State Director for Rural Development Alan Stephens will discuss the grants.

Ted Simons: Good evening, and welcome to "Horizon," I'm Ted Simons. The Obama administration plans to offer grants to help small businesses, ranchers and farmers improve energy efficiency, including the installation of renewable energy systems. Here to talk about the "Rural Energy for America" program and how it impacts Arizona is Alan Stephens, the state director for rural development. Good to see you, thanks for joining us.

Alan Stephens: Thanks for having me on.

Ted Simons: Did I get that right? What exactly is this program all about?

Alan Stephens: This program started in the 2002 Farm Bill legislation. It's been picking up steam in the Obama administration. It's designed to try to increase the access to renewable energy, energy efficiency systems and reduce our independence on foreign oil, with particular emphasis in rural America, with sometimes rural communities don't get the same kind of attention by some of the companies that are selling these renewable energy systems.

Ted Simons: How do we define rural America? How do we define rural Arizona?

Alan Stephens: Generally, rural Arizona are communities outside the metropolitan areas of Phoenix and Tucson, communities of less than 50,000. We're not talking Flagstaff here, but a community in Prescott Valley, for instance.

Ted Simmons: What size grants are we talking about?

Alan Stephens: Well there are two categories and the President and Secretary of Agriculture Thomas Vilsack just announced those grants across the country for less than $20,000. It's a system of $80,000 where the grants is $20,00 and then the small business or rancher has to come up with the remaining 75%.

Ted Simons: Interesting. Are there guidelines we need to know about for this, especially those who might think they might qualify in the rural areas?

Alan Stephens: We can fund programs that deal with solar energy, which are all the ones in Arizona, which you would expect, given the amount of sun we have here. But also geothermal systems dealing with wind energy, and then energy conservation techniques like lighting, insulation on windows, doors, high efficiency air-conditioning systems. Those are the kind of things that we can fund. The company again gets a $20,000 grant as maximum for these programs and then has to come up with the remaining $60,000. Many of these companies that we've funded, this reduces their operating costs, which allows them to retain the jobs that they have now, or hire new people so it's really a kind of a job stimulate.

Ted Simons: And for Arizona, how many grants are we talking about?

Alan Stephens: We just made 10 grants for the smaller level and we will announce in the near future the larger grants.

Ted Simons: Are these Grants, are these loan guarantees? A little bit of both, how does this work?

Alan Stephens: These are all grants, we do not have loan guarantees in Arizona. People either choose to self-fund or look at another financial institution for the remaining 75%.

Ted Simmons: You mentioned that this program began in 2002 but seems to be picking up steam a little bit here. That means that we've had experience in the past, regarding they call it REAP I guess it's the acronym for it, experience in Arizona in the past or just other examples you can give us and let us know what we're talking about?

Alan Stephens: It's picking up in Arizona. We've had the most applications this year that we've ever had. We did a pretty sizeable outreach effort throughout the year. The way the program works, people can submit applications all year long and we fund them usually in the spring.

Ted Simons: Okay. Are there examples in the past of folks who have received grants, received loan guarantees, and how they have developed since then?

Alan Stephens: Sure. A small business owner from a vitamin store in Douglas, Arizona, a couple of years ago we funded a grant of about $37,000 for about $150,000 system; he came up with the rest, actually through a loan guarantee through a local bank in the area. He was able to save over 80% of his electric bill. He was able to qualify for an electric rebate through his electric company. And then also he was able to qualify for a federal tax rebate. He did very well. He created a lot of operating capital for himself by reducing his electric costs.

Ted Simons: In this economic environment though where you have to find money, the government will help you, the program assists you, but you still have to find the money to get this thing going. How difficult is that?

Alan Stephens: It's very difficult. That's why a lot of small businesses today aren't able to apply, because they may not have the available resources to come up with the remaining 75%. This is a great designed to leverage other resources to bring renewable energy, the benefits of renewable energy, into rural America.

Ted Simons: Is it more difficult when it comes to something "experimental," like renewable energy, as opposed to something more concrete as retrofitting windows and these kinds of things?

Alan Stephens: Actually, we have more interest in the renewable energy side, particularly in the solar. Arizona, many people say we should be the solar capital of the United States, so I think a lot of people look at solar first and see how much they can afford and how much they can save.

Ted Simons: Interesting. This kind of focus, this kind of concentration on rural businesses, whatever the business is, the focus again seems to be on small towns, small outlying areas. Why is that so important?

Alan Stephens: Well, particularly from the standpoint of communities that may not have access to a lot of the contractors and a lot of the businesses that are now engaged in installing these kinds of systems, and sometimes the banks don't look as kindly in rural America as urban America, simply because they may not meet the initial credit test, et cetera. This is an attempt to try to bring the same opportunity to urban America has, Arizona in this case, to the rest of the state.

Ted Simons: Allow them to get that kind of leverage and get it going?

Alan Stephens: Right. And again, it's going to create jobs in rural communities. And of course, we all know that many parts of rural America are suffering a little bit more than urban America right now.

Ted Simons: What kind of timetable are we looking at here in terms of getting the grants out there, getting the grants accepted, and then moving ahead with development?

Alan Stephens: Basically it'll take you a month or two, maybe three, to do the research and work with us to put together that initial grant. But then again I said once a year we fund them. So you've got now about nine months to when we really start funding them the next time around in 2012.

Ted Simons: Do you figure a deluge of applicants for these?

Alan Stephens: Well we hope so. We almost probably increased by 40% the number of applications this year, and we'd like to do the same next year.

Ted Simons: Alright, very good. Alan, thanks for joining us.

Alan Stephens: Thank you very much.

Alan Stephens:Arizona State Director for Rural Development

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