U.S. Rep. Frank Lucas (R-OK) and 80 of his colleagues in the U.S. House of Representatives requested that the Federal Reserve extend short-term credit to utility companies to enable them to continue meeting the needs of their customers during the coronavirus pandemic.
“Utilities have committed to prohibiting utility shut-offs for customers who may have been impacted by job loss or financial distress or any reason they are unable to pay their utility bills during this time,” wrote Rep. Lucas and the lawmakers in an April 2 letter sent to Federal Reserve Chairman Jerome Powell. “At the same time, lineman and power plant operators are on the front lines to ensure safe and reliable electric service throughout this crisis.”
To continue their efforts, according to their letter, utilities need reliable access to short-term liquidity provided through the commercial paper (CP) markets, a critical source of cost-effective, short-term funding for many of America’s highest-rated companies.
“These companies rely on liquid, smoothly functioning CP markets every day to make critical payments like payroll, income taxes, supplier payments and other working capital needs,” Rep. Lucas and the lawmakers wrote. “Most electric utilities are rated at A2/P2/F2 by at least two of the major credit rating agencies and are considered “Tier 2” issuers of CP.”
Rep. Lucas and the lawmakers called on the Federal Reserve to extend the Commercial Paper Funding Facility to CP issuers in the Tier 2 CP market that are in sectors designated as critical infrastructure under the Presidential Policy Directive on Critical Infrastructure Security and Resilience.
“Like so many other American businesses, electric, gas and water utilities are committed to supporting their customers and the entire economy as we navigate through this unprecedented pandemic,” wrote Rep. Lucas and the lawmakers. “As our nation’s electric, gas and water utilities diligently protect their customers, turning back on the power to those who have been behind on their payments and prohibiting utility shut-offs for customers who have been impacted during this crisis, the Federal Reserve must ensure that these companies have access to short-term credit.”