ARC_NOFO.pdf

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Affordable Rural Cooperative (ARC) Program

Fiscal Year 2026

Notice of Funding Opportunity (NOFO)

Funding Opportunity Number: RUS-ARC-2026

Publication Date: September 14, 2026

Letter of Interest Opens: 11:59 a.m. ET on October 19, 2026

Letter of Interest Due Date: 11:59 a.m. ET on November 20, 2026

Karl Elmshaeuser

Administrator

Rural Utilities Service

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PROGRAM SOLICITATION INFORMATION

Funding Opportunity Title: Affordable Rural Cooperative Program

Funding Opportunity Number: RUS-ARC-2026

Announcement Type: Notice of Funding Opportunity (NOFO)

Assistance Listing Number: 10.758

Dates: Letters of Interest can be submitted beginning at 11:59 a.m. Eastern Time (ET) on October 19, 2026, and until 11:59 a.m. ET on November 20, 2026. Letters of Interest will not be accepted after 11:59 a.m. ET on November 20, 2026.

Executive Summary: The Rural Utilities Service (RUS or the Agency), a Rural Development (RD) agency of the United States Department of Agriculture (USDA), is soliciting Letters of Interest (LOI) for applications under the Affordable Rural Cooperative (ARC) Program. In addition, the Agency is announcing the eligibility requirements, application process and deadlines, and the criteria that will be used by RUS to assess ARC Applications. The ARC Program is making approximately $175 million in appropriated budget authority for the cost of loan and grant funds available under the Inflation Reduction Act (IRA) of 2022.

In keeping with the statutory authority for the program, RUS will utilize the ARC funds to assist Eligible Entities to achieve future net reductions consistent with Section 22004 of the IRA through the deployment of advanced, efficient transmission infrastructure and nuclear power supply. Available funds will be allocated for each purpose while advancing the long-term resiliency, reliability, and affordability of rural electric systems. All Eligible Entities are responsible for any expenses incurred in developing their LOIs and ARC Applications.

TIPS FOR APPLICANTS

• To do business with the Federal Government and to submit your application electronically using the Grant Application Portal, you must— o Have a Unique Entity Identifier (UEI) and a Taxpayer Identification Number (TIN);

o Be registered in SAM.gov (System for Award Management), the Government's primary registrant database;

o Provide your UEI number and TIN on your application; and o Maintain an active SAM registration with current information throughout the application review period and, if you are awarded a grant, during the project period.

• Register and submit applications early. DO NOT WAIT UNTIL THE DAY OF THE APPLICATION

DEADLINE.

• Thoroughly read this Notice of Funding Opportunity (NOFO) and follow all the instructions.

• Thoroughly review the guidelines and policies as outlined in this notice to ensure the application is received and eligible for consideration, and to understand allowable and unallowable costs.

• Apply for the correct grant program o Assistance Listing number “10.758” and Funding Opportunity Number “RUS-ARC-2026” https://www.congress.gov/bill/117th-congress/house-bill/5376/text https://sam.gov/

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• When uploading attachments, click the “Upload Documents” button in the Grant Application Portal (do NOT use the “paperclip” icon in Adobe Reader). Acceptable file types include .doc, .docx, .pdf, .jpg, .jpeg, .png, .gif, .xls, .xlsx, .txt, .ppt, and .pptx

• Do not password-protect your documents and make sure all tracked-changes are “accepted”.

• Avoid Special Characters in File Names (e.g., $, %, &, *, Spanish "ñ", etc.).

• Input the correct UEI number on the Grant Application Portal.

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TABLE OF CONTENTS

1.0 Program Description

1.1 Purpose of the Program

1.2 Statutory and Regulatory Authority

1.3 Definitions

1.4 Application of Awards

2.0 Federal Award Information

3.0 Eligibility Information

3.1 Eligibility Information

3.2 Matching Funds

3.3 Other Requirements

4.0 APPLICATION AND SUBMISSION INFORMATION

4.1 Access to the Application Portal

4.2 Content and Form of Application

4.3 Unique Entity Identifier and System for Award Management

4.4 Submission Dates and Times

4.5 Intergovernmental Review

4.6 Funding Limitations

4.7 Other Submission Requirements

5.0 Application Review Information

5.1 Criteria

5.2 Scoring

6.0 Federal Award Administration Information

6.1 Federal Award Notices

6.2 Administrative and National Policy Requirements

6.3 Reporting

7.0 Federal Award Agency Contacts

8.0 Other Information

8.1 Buy America Requirements

8.2 Paperwork Reduction Act

8.3 National Environmental Policy Act

8.4 Federal Funding Accountability and Transparency Act

8.5 Civil Rights Act

8.6 Equal Opportunity for Religious Organizations

8.7 Nondiscrimination Statement

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1.0 PROGRAM DESCRIPTION

1.1 Purpose of the Program

For nearly a century, rural electric cooperatives have been the backbone of power delivery for rural America, building the infrastructure necessary for economic development and a high quality of life.

Owned by their members, cooperatives are a fundamental part of rural communities, employing residents, pushing progress, and providing leadership.

This funding notice advances the statutory purpose of achieving the greatest reductions as provided in Section 22004 of the IRA associated with rural electric systems by increasing the amount of emission-free nuclear power and increasing the efficiency of the transmission grid within such systems. These new sources of cooperative power supply and enhanced transmission efficiency will result in reduced future demand for other sources of power.

By promoting activities that may increase baseload and transmission efficiency, the Affordable Rural Cooperative (ARC) Program provides financial assistance to Eligible Entities, as described in Section 3.1 of this Notice, to leverage affordable, clean power through the cooperatives’ voluntary efforts in a way that further promotes the statutory purposes of resiliency and reliability of rural electric systems and affordability for their members.

1.2 Statutory and Regulatory Authority

The ARC Program is authorized under the Inflation Reduction Act of 2022 (Public Law No. 117-169, “IRA”), Subtitle C, Section 22004, and will be administered by RUS. Section 22004 amends 7 U.S.C. 8103 by adding subsection (j) to that section. Other regulations that apply to this Notice are provided in Section 6.1(a)(2)(i).

1.3 Definitions

The definitions applicable to this Notice are as follows:

Administrator. The Administrator of the RUS, an agency under the RD mission area of the USDA.

ARC Application. An application containing all information required by RUS as identified in the Invitation to Proceed. The ARC application must be materially complete in form and substance satisfactory to RUS within the specified time as defined in Section 4.2(b) of this NOFO.

Agency. The Rural Utilities Service (RUS).

Applicant. An Eligible Entity that has received an Invitation to Proceed to submit an ARC Application.

Award. The financial assistance, in the form of loans and/or grants, offered to an Applicant under this Notice.

Award Agreement. The agreement between RUS and the Applicant describing the terms and conditions of the Award.

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Award Documents. All agreements and documentation to support and evidence the financial assistance and obligations of the Awardee, including the Award Agreement, loan or grant agreements, promissory notes, mortgages, deeds of trust, indentures, and other security agreements executed in connection with the Award.

Awardee. An entity that has been awarded funding under the ARC.

Capital Improvements or Acquisitions Grant. Grants made for Eligible Activities used for investment in physical infrastructure, including investments made to extend the useful life or improve the efficiency of existing assets, or used to purchase an ownership interest in whole or in part in eligible physical plant.

The grant may be secured as a Project Award, System Award, or the federal interest in the property will remain protected as provided in the property standards found within 2 CFR part 200 subpart D, as determined by the Administrator. Although the grant may be secured as a Project Award or System Award, nothing in this Notice shall be construed to cause the amount of such grant to exceed 25 percent of Eligible Award Costs.

Commercially Available Technology. Equipment, devices, applications, or systems that have a proven, reliable performance and replicable operating history specific to the proposed application. The equipment, device, application, or system is based on established patent design or has been certified by an industry-recognized organization and subject to installation, operating, and maintenance procedures generally accepted by industry practices and standards. Service and replacement parts for the equipment, device, application, or system must be readily available in the marketplace with established warranty applicable to parts, labor, and performance. The technology must be designed and meant for the proposed use.

Commitment Letter. The notification issued by the Administrator to an Applicant containing the total Award, the acceptable security arrangement, and such controls and conditions on the Awardees’ financial, investment, operational and managerial activities deemed necessary by the Administrator to adequately secure the Government’s interest. This notification will also describe the accounting standards and audit requirements applicable to the Award.

Eligible Activity(ies). The purchase of Eligible Energy, eligible nuclear energy systems (or a share of such systems), the deployment of such systems, system improvements that result in the extension of the plant’s useful life or expansion of its power output, or the implementation of advanced energy efficiency improvements to transmission systems of an Eligible Entity occurring after the publication date of this Notice, provided such activities can be accomplished within a timeframe that facilitates the disbursement of funds by September 30, 2031.To be an Eligible Activity, the Project should be designed, constructed and operated based on proven Commercially Available Technology, and commercial operation should be achieved and subsequent successful testing should be conducted to the satisfaction of RUS before September 30, 2031. Eligible Activities do not include research and development, feasibility studies, or other activities that do not result in the production or purchase of power supply or the enhancement of transmission grid efficiency.

Eligible Award Costs are defined in Section 3.3(a).

Eligible Energy. The term “Eligible Energy” means energy derived from Nuclear Power.

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Eligible Entity(ies). An electric cooperative described in section 501(c)(12) or 1381(a)(2) of the Internal Revenue Code of 1986 that is or has been a RUS or Rural Electrification Administration (REA) electric loan borrower pursuant to the Rural Electrification Act of 1936 (RE Act) or is serving a predominantly Rural Area (or a wholly or jointly owned subsidiary of any the preceding listed such electric cooperatives).

Eligible Service Area. An area as described in Section 3.1(c) of this Notice.

Energy Storage System(s). A facility capable of accepting energy, storing the energy for a period of time and then later releasing the stored energy.

Environmental and Historic Preservation Requirements. The National Environmental Policy Act of 1969, as amended (NEPA) (42 U.S.C 4321, et seq), implemented by USDA at 7 CFR 1b, Section 7 of the Endangered Species Act (16 U.S.C. 1531 et seq.) (50 CFR part 402), and Section 106 of the National Historic Preservation Act (NHPA)(54 U.S.C. 300101 et seq.)(36 CFR Part 800).

Financial Feasibility. An Eligible Entity’s ability, as determined by the Administrator, to generate sufficient revenues to cover its expenses, sufficient cash flow to service its debts and obligations as they come due, and meet the financial ratios set forth in the applicable Award Documents.

Indian Tribe. The term “Indian Tribe” has the meaning given the term in section 5304 of title 25.

Invitation to Proceed. A written notification issued by RUS to the Eligible Entity acknowledging that the LOI was received, reviewed, and inviting the Eligible Entity to submit an ARC Application. The notification provides the Applicant instructions on how to submit the application package and details of the next steps in the application process.

Letter of Interest (LOI). A signed letter issued by an Eligible Entity notifying RUS of its intent to apply for an Award and addressing all the elements identified for a complete LOI in Section 4.2(c) of this NOFO.

New Clean Power Tool. A simple Excel spreadsheet tool developed by RUS to rank Projects in the context of affordability. RUS will provide the New Clean Power Tool to the Applicant to input data related to its Portfolio of Actions and estimate the future reduction as provided in Section 22004 of the IRA through the addition of new nuclear power and/or transmission grid efficiency, including through the reduction in line-loss or increases in throughput, from the Portfolio of Actions.

Nuclear Power. Shall mean a source of electricity derived from a nuclear fission reaction produced with and using Commercially Available Technology.

Off-taker. Shall mean: (1) The customers or members of the Applicant that purchase and receive electrical power and energy from the Applicant; or (2) the entity that has or will execute a Power Purchase Agreement (PPA) with the Applicant to purchase and receive electrical capacity and associated energy produced by the Project. The Off-taker may also be referred to in the PPA as the “Buyer”, “Customer”, “Purchaser”, or another name that describes the entity purchasing the power.

Portfolio of Actions. The combination of the Applicant’s proposed actions related to Nuclear Power generation, PPAB (as defined below) and transmission investments eligible under this NOFO that https://www.ecfr.gov/current/title-7/subtitle-A/part-1b https://www.ecfr.gov/current/title-50/chapter-IV/subchapter-A/part-402 https://www.ecfr.gov/current/title-36/chapter-VIII/part-800

8 | P a g e support actions consistent with long-term resiliency, reliability, and affordability of rural electric systems.

Power Purchase Agreement—Buyer (PPAB). Shall mean any binding agreement approved by RUS and included in the Project and executed between the Applicant and a seller under which the Applicant agrees to purchase and receive from the seller over the term of such agreement the electrical capacity and associated energy as approved under the Project. A PPAB may include other transactions such as the selling and purchasing of Environmental Attributes or ancillary services (e.g., voltage regulation and synchronization, contingency reserves).

Power Purchase Agreement--Seller (PPAS). For a power seller, a binding agreement executed between the Applicant and an Off-taker under which the Off-taker agrees to purchase and receive from the Applicant the electrical capacity and associated energy produced by the Project at a pre-determined price and term. The PPAS may include other transactions such as the selling and purchasing of environmental attributes or ancillary services such as voltage regulation and synchronization, and contingency reserves. Environmental attributes include all financial attributes that are created or otherwise arise from the Project’s generation of electricity that include, but are not limited to, any environmental air quality credits, green credits, renewable energy credits (RECs), carbon credits, emissions reduction credits, emission rate credits, certificates, tags, offsets, allowances, etc.

Power Purchase Agreement (PPA) Awards. PPA Awards are grant or loan financed purchases of a quantity of Eligible Energy over a period of time as provided in a PPAB. A PPA Award may be a PPA Loan Award or PPA Grant Award.

Project. Any Eligible Activity, including new facilities, newly-acquired facilities or a PPAB that provide or purchase Eligible Energy, or Transmission Energy Efficiency Improvements that demonstrably improve transmission efficiency, that when scored using the criteria provided in Sections 2.0, 3.1, and 5.2 of this Notice are eligible to be financed with ARC Program loan and/or grant funds, consistent with Section 22004 of the IRA, provided each component Eligible Activity is compliant with all other applicable requirements of this Notice.

Project Award. The term “Project Award” means an Award which is secured by a security interest in the assets and revenues of the Project and supporting credit enhancements, including parent or other guarantees when required by the Administrator, relating to the Project rather than by a security interest in all of the assets of the Applicant’s electric system. Project Awards are only available to current operating utilities or affiliated entities.

Rural Area. A Rural Area shall mean one or more of the following: (1) Any area of the United States, its territories, and insular possessions (including any area within the Federated States of Micronesia, the Marshall Islands, and the Republic of Palau) other than a city, town, or unincorporated area that has a population of greater than 50,000 inhabitants, adjusted to exclude individuals incarcerated on a long-term or regional basis or the first 1,500 individuals who reside in housing located on a military base, or

(2) Communities where non-rural service is necessary and incidental to providing intended benefits to Rural Areas described above.

Secretary. The Secretary of the United States Department of Agriculture.

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Section 22004 Reduction. Reductions to achieve the greatest reduction in carbon dioxide, methane, and nitrous oxide emissions of the type and kind as provided for in 7 U.S.C. 8103(j)(1).

Substantially Underserved Trust Area (SUTA). An area defined under Section 306F of the Rural Electrification Act (https://www.rd.usda.gov/files/utprea36.pdf).

System Awards. Awards where the Awardee will provide or has already provided RUS with a perfected senior lien in substantially all its assets, both real and personal property, including intangible personal property and any property acquired after the date of the loan. Awards must be secured by all, or substantially all, of the system assets, including the Project to be financed with a System Award. System Awards are only available to operating electric cooperative utilities.

Transmission Energy Efficiency Improvements. Transmission Energy Efficiency Improvements to an Applicant’s transmission system shall include measures that result in the demonstrable efficiencies and Section 22004 Reductions through, including but not limited to: (1) Reduction in transmission energy line losses; (2) Investments that alleviate transmission congestion as it relates to the delivery of power generated from Renewable Energy Systems or Zero-Emission Systems; (3) Investments in technologies that increase the capacity and efficiency of existing transmission facilities or increase transmission capacity within existing rights-of-way, such as investments in advanced high-capacity conductor technologies or Grid-Enhancing Technologies; and (4) Construction of new transmission lines for the transmission of power generated from Zero-Emission Systems.

Zero-Emission System. Any system that does not produce any emissions of gases described in Section 22004 when it is operated.

1.4 Application of Awards

All LOIs must be submitted to RUS electronically through Grants.gov. Letters of Interest can be submitted beginning at 11:59 a.m. Eastern Time (ET) on October 19, 2026, and until 11:59 a.m. ET on November 20, 2026. Letters of Interest will not be accepted after 11:59 a.m. ET on November 20, 2026.

LOI submissions will be made through Grants.gov. The Agency will review and evaluate the LOIs pursuant to the criteria described in Sections 3.1, 4.2, and 5. LOI submitters with high-ranking scores will receive an invitation to proceed and the agency will provide information about the method of application submission at that time Letters of Interest must include data as calculated in the New Clean Power Tool or comparable information as determined by the Administrator for their proposed Project(s) when compared to a future state without such investments.

At the LOI stage, applicants will submit a New Clean Power tool calculation. The Eligible Entity may also provide the data that is required within the New Clean Power Tool by another method. The Eligible Entity’s use of other methods, however, may impact the Agency’s timeline for review of the LOI. An Eligible Entity that elects to use methods other than the New Clean Power Tool must demonstrate that its chosen method provides comparable information as the New Clean Power Tool as determined by the Administrator that will allow the Agency to score the Portfolio of Actions under the criteria listed in Sections 2.0(g), 3.1, and 5.2 of this Notice.

https://www.rd.usda.gov/files/utprea36.pdf

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Upon review of the LOIs, RUS may issue an Invitation to Proceed to submit an ARC Application to those Eligible Entities whose LOIs contain proposed Projects that the Agency determines are sufficiently strong in any of the criteria listed in Sections 2.0, 3.1, and 5.2 and advance the goals underlying the ARC Program as described in this Notice.

The Agency will review and evaluate all ARC Applications based on the information contained in the application and will utilize the same criteria that it utilized in evaluating the LOIs. The Applicant may utilize the same data it provided to the Agency with respect to the estimated Section 22004 Reduction stemming from the Portfolio of Actions that it provided in the LOI, if it certifies in the ARC Application that the data is still accurate. The Agency advises all interested parties that the Eligible Entity bears the full burden and cost of preparing and submitting an LOI and, if invited, an ARC Application in response to this Notice. RUS reserves the right to ask Applicants for clarifying information on, or additional information related to, the ARC Application. The Agency reserves the right to offer an Applicant a financial package different than requested. The Agency also reserves the right to add funds to this competition should they become available.

2.0 FEDERAL AWARD INFORMATION

Types of Awards: Loans, Loan/Grant Combination and Grants

Fiscal Year Funds: Congress appropriated the IRA funds in FY 2023 and Section 22004 requires all IRA funds to be disbursed before September 30, 2031.

Available Funds: The amount of funding made available under the Notice will be approximately $175 million. The Agency reserves the right to increase that amount should funds become available or decrease the amount should applications not provide sufficient program benefits. RUS may, at its discretion, increase the total level of funding available in this Notice or in any category in this funding round from any available source, provided funded projects meet the requirements of the statute that made the funding available to the Agency.

A loan made pursuant to this Notice may not result in a disbursement of funds after September 30, 2031. A grant made pursuant to this Notice may not result in an outlay after September 30, 2031.

Applicants are advised that the final advance date applied to individual Projects will be well in advance of September 30, 2031.

Award Amounts: As provided in Section 22004 of IRA, no one Applicant may receive an amount equal to more than 10 percent of the total $9.7 billion of budget authority appropriated under Section 22004, which equals $970 million in budget authority. The Applicant’s Portfolio of Actions may cost more than $970 million so long as the funded application uses less than $970 million in budget authority. This limitation includes prior awards made under Section 22004 of the IRA in the New ERA competition. The section further limits the amount of a grant to no more than 25 percent of the total Eligible Award Costs of the Applicant in carrying out a Project utilizing a grant. Funds made available under this NOFO will be initially divided on a roughly equal basis between Transmission Energy Efficiency Improvement awards and Eligible Energy awards. No awardee will receive more than $20 million in budget authority under this NOFO. The Administrator may adjust the distribution of award funds based on the overall quality

11 | P a g e and benefits of applications received. Prior New ERA awards may be considered in making award decisions.

System Awards, Project Awards, PPA Awards, Capital Improvements or Acquisitions Grant Awards and Financial Assistance: The following types of Awards and financial assistance are available to eligible operating utilities to fund Eligible Activities under the ARC Program:

(a) System Awards and Project Awards: System Awards and Project Awards will be offered to Eligible Entities under the ARC Program to finance Projects in accordance with Section 3.2(a) of this Notice.

(1) Except for Capital Improvements or Acquisitions Grants secured as System Awards, System

Awards may, at the discretion of the Administrator, finance an ARC Award up to 100 percent of the Eligible Award Costs included in the application based on the risk profile of the Applicant and the proposed Project. At the discretion of the Administrator, RUS may release proceeds from a System Award to finance Projects for costs incurred during the construction of the facilities. System Awards are only available to operating electric cooperative utilities.

(2) Project Awards are generally secured by a senior security interest in the Project assets and the revenues generated from the Project, although the Agency may require additional collateral for a Project Award based on the risk profile of the ARC Application and/or the Project. Project Awards will require additional cash reserves. Further, to the extent that a PPA is in place between the Awardee and an Off-taker, the Awardee must collaterally assign the PPA to RUS as security and the Off-taker must consent to such assignment. Except for Capital Improvements or Acquisition Grants secured as Project Awards, RUS will finance up to 75 percent of the total capitalized cost of the Project in the loan component of a Project Award. The Awardee will be required to initially provide and maintain for the term of the Project Award at least 25 percent of the Project’s total capitalized cost in the form of cash or an equity investment that does not include debt from any source. RUS may, at the Administrator’s discretion, consider allowing Awardees to utilize the grant component of the Award for the required equity where RUS determines it to be financially feasible. Further, RUS may, at the Administrators discretion, consider financing up to 100 percent of the capitalized cost of a Project if the Project benefits a SUTA eligible territory as provided in Section 306F of the RE Act. The Agency may consider allowing the Applicant to utilize, as the required equity component, any investment tax credits or elective payments in lieu of investment tax credits that the Awardee is entitled to receive under the Internal Revenue Code, if permitted under applicable authorities. The Agency may also consider allowing the Applicant to utilize as the required equity component any grant, including the grant component of the ARC Award or a grant from any other source, if permitted under applicable authorities. The Agency may require the Awardee to provide additional credit support pending the Awardee’s receipt of the Investment Tax Credit or Direct Payment in lieu of the Investment Tax Credit.

(3) PPA Loan Awards may either be Project Awards or System Awards at the discretion of the Administrator.

(4) PPA Grant Awards will be funded on a reimbursement basis to fund Eligible Award Costs as described in Section 3.3(a) and will be secured by such additional collateral as the Administrator may require. The Agency reserves the right to structure reimbursements for PPA Grant Awards

12 | P a g e in a manner that is consistent with the program’s statutory requirements and prudent risk management, including disbursing funds into a restricted depository account.

(5) Capital Improvements or Acquisitions Grant Award will be secured as determined necessary by the Administrator as a Project Award, System Award, or the federal interest in the property will remain protected as provided in the property standards found within 2 CFR part 200 subpart D.

(6) RUS will only advance Award proceeds after commercial operation is achieved and subsequent successful testing is conducted to the satisfaction of RUS, but in no case will funds be advanced after September 30, 2031.

Types of Financial Assistance: Applicants are invited to propose assistance from any single financial assistance product or a combination of such products, described below. The Agency reserves the right to offer an Applicant a financial package different than requested. The most competitive and affordable applications will receive the best financial offerings as outlined below.

(a) Loan Only. An Applicant may request an Award to finance any Project or combination of Projects in its application with a loan only award. The interest rate for a loan only award will be the Treasury rate minus one-eighth of one percent. Principal will be deferred for a period of two years from the date of the promissory note. The amortization period will be based on the term of the Award as defined in Section (b) below.

(b) Loan and Grant Combinations and Grant only Awards.

(1) Loan and Grant Combination. An Applicant may request to finance any Project or Projects in its application with a grant or grant/loan combination where the grant amount equals no more than 25 percent of the Eligible Award Costs. The interest rate and amortization for the loan component of the Award will be set as described in Section 2.0 above. Applicants may propose substituting cash for the loan component, or any portion of the loan component, at the time of application.

(2) Grant only Awards. An Applicant may request an Award to finance any Project or combination of Projects in its application with a 100 percent grant. A 100 percent grant Award may finance no more than 25 percent of the total Eligible Award Costs. Grants, both as a part of a loan and grant combination Award or as a 100 percent grant Award, will be considered based on the estimated score and rank of the application stemming from the Applicant’s proposed Portfolio of Actions as measured by the criteria outlined in Section 5.1 of this Notice. The grant portion of an Award will be subject to terms and conditions necessary to protect the Government’s interest while also ensuring accomplishment of the grant purposes, all as determined by the RUS Administrator.

All Awards. The amount of appropriated funds consumed by any individual funded ARC Application will depend on the amount of grant used, which scores on a dollar-for-dollar basis, and the amount of loans, which scores at a subsidy rate related to the difference between the interest rate offered on the loan and prevailing treasury rates, portfolio risk, and other factors at the time of obligation. RUS will make this calculation before making an Award to ensure compliance with the statutory limitations described in Section 2.0. The Agency further reserves the right to take into account when making Awards the cost

13 | P a g e effectiveness of the proposed Projects relative to the appropriated funds consumed and/or benefits to consumers in Rural Areas.

Anticipated Award Date: Summer/Fall 2027.

Performance Period: Four (4) years from the date of environmental clearance, but no later than September 30, 2031.

Use of other governmental funds: The Agency will generally allow the Awardee to combine the incentives contained in this Notice with other governmental benefits, provided such combinations are otherwise permitted by law or regulation.

Renewal or Supplemental Awards: None.

Type of Assistance Instrument: Loan and Grant Agreements.

Depository Account: The agency reserves the right to disburse funds into a restricted depository account to ensure statutory compliance and mitigate taxpayer risk.

3.0 ELIGIBILITY INFORMATION

3.1 Eligibility Information

The applicant and its principals must not be debarred, suspended, or otherwise excluded from participation in USDA programs, in accordance with 2 CFR Parts 180 and 417. The applicant must not be delinquent on any federal debt, nor have any outstanding judgment obtained by the U.S. in a Federal court. Upon receipt of application, prior to award, and prior to disbursement of federal funds, the agency will screen the applicant and its principals through the Do Not Pay System, as required by 31 U.S.C. 3354, to verify eligibility with respect to debarment, suspension, and any unresolved federal debts. Applicants are responsible for resolving any issues identified in the Do Not Pay System; if such issues are not resolved by the deadlines specified in this notice, the agency may proceed to award funds to other eligible applicants. Applicants are responsible for compliance with all applicable regulations, including 2 CFR Parts 180 and 417.

Eligible Entities, Projects, Service Areas and other Eligibility Factors.

(a) Eligible Entities are:

(1) Operating Electric cooperatives described in section 501(c)(12) or 1381(a)(2) of the Internal

Revenue Code of 1986 who are currently or have been in the past a RUS electric loan borrower pursuant to the RE Act;

(2) Electric cooperatives serving predominantly Rural Areas; or

(3) Wholly or jointly owned subsidiaries of such electric cooperatives listed in (1) and (2).

For the purposes of this program, the term “predominantly rural” as used in (2) in this paragraph shall mean a service territory that must include at least 50 percent Rural Areas.

(b) An eligible Project includes a Portfolio of Actions that will result in Section 22004 Reductions and be consistent with long-term resiliency, reliability, and affordability of rural electric systems. Such https://www.ecfr.gov/current/title-2/subtitle-A/chapter-I/part-180 https://www.ecfr.gov/current/title-2/subtitle-A/chapter-I/part-180 https://www.ecfr.gov/current/title-2/subtitle-A/chapter-I/part-180 https://www.ecfr.gov/current/title-2/subtitle-A/chapter-I/part-180

14 | P a g e actions include, but are not limited to the purchase, acquisition, partial ownership, or construction of:

(1) Eligible Energy or systems generating Eligible Energy, or

(2) Transmission Energy Efficiency Improvements.

(c) Eligible Service Areas:

(1) Electricity generated from or transmitted by facilities financed with ARC funds shall be for the benefit of consumers located in Eligible Service Areas as defined in this Section.

(2) The facilities to be financed with an Award to an Applicant that is not a current or former

RUS/REA borrower must provide electric service to consumers located in those areas that are considered “predominantly rural.” RUS, in making a determination of whether a service area is predominantly rural will:

(i) Identify the service territory where electricity from the facilities to be financed by the proposed Award will be delivered and consumed; and

(ii) Further identify those areas within the service territory that are in Rural Areas in comparison to those that are in non-rural areas. The ratio of the population located in the Rural Areas versus the population of the entire service territory is referred to as the “rural percentage” of the service territory. Meters served in lieu of population may be used as a proxy to determine rural percentage of the service territory. For purposes of this NOFO, a service territory that is determined to have a rural percentage equal to or greater than 50 percent is considered predominantly rural and is an Eligible Service Area. RUS will make the rurality determination by examining the shapefile the Eligible Entity submits with its LOI as provided in Section 4.2(c)(1)(vii). of this Notice.

(d) Other Eligibility Factors: Program Factors. In addition to the above eligibility factors, the Agency may consider the following in determining which LOIs to select to provide an Invitation to Proceed, and then in evaluating the full ARC Application.

(1) Reliability and Resiliency:

(i) All proposals must promote the reliability and resiliency of rural electric systems; and

(ii) Plans may include transmission improvements to measurably reduce congestion, and improve system efficiency.

(2) Affordability:

(i) All proposals must be affordable to the consumers in the Eligible Service Area who will be served by the Project in question.

(ii) The Administrator reserves the discretion to take consumer impact and the efficient use of program funds into account when ranking projects at the LOI and Award stages.

(iii) Applicants must demonstrate the Award will produce member rate benefits.

(3) Construction awards must be for projects that have or will commence construction after the date of the publication of this NOFO. Power purchase awards must be for new power purchases that commence after the date of the publication of this NOFO.

(4) Geographic Diversity: In making selections for full applications, the Administrator may take the geographic distribution of proposed Projects into account.

(5) Resources: In making selections for full applications, the Administrator may take the ARC funding requested for the proposed Eligible Award Costs into account relative to the total

15 | P a g e budgetary resources available to the ARC Program. The Administrator reserves the right to reduce the dollar amount offered based on this consideration.

(6) SUTA Considerations: For the purposes of this funding notice, SUTA provisions will be available to the Administrator as it would be in the existing RUS Electric Infrastructure Loan Program under the RE Act; and

(7) Financial Feasibility: The Financial Feasibility of the requested financial assistance by evaluating the cost of the Project relative to the Applicant’s ability to repay the loan component of the Award or perform the applicant’s obligations under a grant agreement.

3.2 Matching Funds

Cost Sharing or Matching. For Project and System loans, RUS will finance up to 75 percent of the total capitalized cost of the Project in the loan component of a Project and/or System Award. The Awardee will be required to initially provide and maintain for the term of the Project and/or System Award at least 25 percent of the Project’s total capitalized cost in the form of cash or an equity investment.

As noted in Section 2.0 above, the Agency may where Financially Feasible allow an Awardee to utilize the grant component of the Award and/or any applicable tax credit that it expects to receive (including credit amounts expected to be received through Elective Pay elections under section 6417 of the Internal Revenue Code) toward the 25 percent equity requirement for a Project Award. Such financial equity may not come from the proceeds of any loan from any creditor, including insiders of the Awardee.

3.3 Other Requirements

Eligible and Ineligible Costs. Award funds must be used to pay only allowable, necessary, and eligible costs incurred post Award, except for approved pre-application expenses that are listed below. Eligible costs must be consistent with the cost principles identified in 2 CFR part 200, Subpart E. Any request for an advance of funds under the Award that includes any ineligible costs will be rejected.

(a) Eligible Award Costs. Award funds under this NOFO may be used to pay for the following costs:

(1) To fund the construction or improvement or purchase of facilities, including buildings and land required to construct the facilities being financed with the Award and other allowable costs and expenses listed in 2 CFR part 200, Subpart E. Award funds may also be utilized for the construction of new linear facilities or the upgrade of existing linear facilities that are necessary to operate any new eligible generation facility or receive new power supply including, but not limited to, transmission or distribution facilities that are needed to export the power;

(2) To fund reasonable pre-award expenses as provided in 2 CFR part 200, Subpart E. Pre-award expenses must be included in the first request for advance of Award funds.

(3) To fund interest incurred during construction pursuant to 7 CFR 1710.106(a)(4); and

(4) To purchase all or a share of a new, operating, or re-energized Nuclear Power facility or to cover the proportional share of the costs related to life extending or repowering investments in an owned share of a Nuclear Power facility; and

(5) To purchase or reimburse for expenses consisting only of Eligible Energy received and purchased by the Applicant under any PPA under which the Applicant purchases power as being eligible for funding on a reimbursement basis. This may include the purchase of Eligible Energy from an https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-E https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-E https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-E https://www.ecfr.gov/current/title-7/part-1710/section-1710.106#p-1710.106(a)(4)

16 | P a g e energy storage system only if the source of energy used to charge the system is generated from one hundred percent (100%) Eligible Energy. This does not include the purchase of energy from any facility where the facility itself (rather than the purchase of power by the Applicant under a PPA) is funded in whole or in part under the New ERA program, the ARC program, or the Powering Affordable Clean Energy (PACE) Program established under Section 22001 of the IRA.

(b) Ineligible Award Costs. Award funds under this part may not be used for any of the following purposes:

(1) Except as provided in Section 3.3(a)(5) herein, to fund operating expenses of the Awardee unless specifically outlined in the Applicant’s Award Agreement;

(2) To fund costs incurred prior to the date on which the application was submitted other than the eligible pre-award expenses under 2 CFR part 200, Subpart E;

(3) To fund an acquisition of an affiliate, or the purchase or acquisition of any facilities or equipment of an affiliate. Note that if affiliated transactions are contemplated in the application, approval of the application does not constitute approval to enter into affiliated transactions or acceptance of the affiliated arrangements that conflict with the obligations under the Award Documents; and

(4) Any other expense that is not allowed pursuant to 2 CFR part 200, Subpart E.

(5) RUS will not approve funding under this Notice that violates the terms of an Applicant’s existing wholesale power contract.

4.0 APPLICATION AND SUBMISSION INFORMATION

4.1 Access to the Application Portal

After receiving an invitation to proceed, the Agency will provide information about the method of application submission. All Applications must be completed and submitted by an authorized representative of the Applicant and in the manner provided by the Agency. Applicants may work with a collaborator (grant writer, technical assistance provider, or similar) or other representatives. However, the Applicant will be:

(a) Responsible for the completion of the application;

(b) Responsible for edits made to the application by collaborators or representatives, and;

(c) Required to certify to the trueness, accuracy, and completion of the application content.

4.2 Content and Form of Application

(a) Address to Request Application Package. Application information and samples concerning the ARC Program are available at https://www.rd.usda.gov/. If you require alternative means of communication for program information (e.g., Braille, large print, audiotape, etc.) please contact 711 Relay Service.

(b) Content and Form of Application Submission. The Agency will provide information on how to complete and submit an application with or following receipt of an Invitation to Proceed. The application process for the ARC Program will be conducted in two phases. Phase 1 will be submission of an LOI that includes sufficient information to determine a pool of prospective https://www.congress.gov/bill/117th-congress/house-bill/5376/text

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Applicants which advance the goals of the statute, achieve policy objectives, meet minimum requirements, and are within the funds allocated to the program. Those LOIs that meet the criteria will be issued an Invitation to Proceed to submit a full, completed ARC Application (Phase 2).

(c) Phase 1 - LOI Submission. The LOI must include the following:

(1) Eligible Entity’s Profile and Point of Contact Information:

(i) Legal name of the Eligible Entity and applicable organizational information. If the Eligible

Entity is a subsidiary of one or more Eligible Entities the Eligible Entity must list its owners in the LOI.

(ii) Eligible Entity’s address, principal place of business, and website.

(iii) Eligible Entity’s tax identification number and its Unique Entity Identifier (UEI) number from the System for Award Management (SAM) registry.

(iv) Specify if the Eligible Entity (a) is an existing RUS borrower; (b) is a former RUS or REA borrower; or (c) has never been a RUS or REA borrower.

(v) Name and title of Eligible Entity’s manager and/or point of contact, including first name, last name, title/position, phone, email, and other relevant contact information.

(vi) A Project name.

(vii) Location of the Project and the applicable service area using a digital shapefile. If the application asserts that the Project or the applicable service area is within a SUTA eligible area, it must describe how such location, or such applicable service area, is a SUTA covered area as provided in 7 CFR 1700.105.

(viii) A statement as to whether the applicant seeks a System Award, Project Award, PPA Award, Capital Improvements or Acquisitions Grant Award, or combination thereof.

(ix) Identify the value of its net assets and specify if the Eligible Entity has ever been placed in receivership, court mandated liquidation, under a workout agreement, or has declared bankruptcy or has had a decree or order issued for relief in any bankruptcy, insolvency, or other similar action.

(A) If the Eligible Entity is a current RUS borrower, the Eligible Entity must not be in default and must be current on any of its obligations to RUS.

(B) The Eligible Entity must submit a copy of its audited balance sheet and income statements for the last three years.

(C) If applicable, the Eligible Entity must provide balance sheet and income statements for the last three years of the entity or entities providing equity or security for the Award together with an explanation of the legal relationship among the legal entities.

(D) If the Eligible Entity is a wholly or jointly owned subsidiary of an electric cooperative, the Eligible Entity must provide a balance sheet and income statement of each of its members.

(2) Identify the type and amount of financial assistance described in Section 2.0 it will seek in its application if it receives an Invitation to Proceed. If the Eligible Entity intends to seek a combination of the types of financial assistance listed in Section 2.0, it must state the amount it intends to seek for each type of financial assistance.

https://www.ecfr.gov/current/title-7/subtitle-B/chapter-XVII/part-1700/subpart-D/section-1700.105

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(3) Disclose if any foreign entity or foreign person has an ownership interest, voting interest, management rights, or an equity interest in the Eligible Entity or any rights in the proposed project(s).

(4) Estimate the proposed Section 22004 Reduction from the Portfolio of Actions as provided in Section 1.4. of this Notice.

(5) Provide a technical description of the Project(s) it intends to finance if it receives an Award. The technical description must include the following:

(i) A description of other actions related to the Projects that will allow the Eligible Entity to provide Section 22004 Reductions.

(ii) The description of the Portfolio of Actions shall not exceed 1,500 words, and it must include a summary of the technical aspects of the various actions that will allow RUS to measure the Section 22004 Reductions resulting from the Portfolio of Actions.

(iii) The Eligible Entity must provide calculations using the New Clean Power Tool or submission of comparable data. Use of other methods by Eligible Entities may impact the Agency’s timeline for review of the application. Eligible Entities that choose to use other methods will need to demonstrate that their method provides comparable information for the Agency to adequately estimate Section 22004 Reductions stemming from its proposed Portfolio of Actions.

(iv) The Eligible Entity must also provide sufficient detail for RUS to determine that the Portfolio of Actions uses Commercially Available Technology, satisfies the technical requirements for this program, and is consistent with industry standards and prudent utility practices.

(v) An Eligible Energy award which includes lineal transmission elements will be scored on the basis of the combined impact of power supply and transmission investments.

(vi) Fully integrated storage technologies may be included in eligible transmission projects provided they provide a measurable project or consumer benefit.

Note: RUS reserves the right to ask Eligible Entities to clarify information on, or additional information related to, the LOI.

(d) Phase 2 – Application Submission. Upon receiving an Invitation to Proceed, the Applicant must submit its application package within ninety (90) calendar days of receipt of such invitation.

Regardless of the type of Award sought, the Applicant’s application package must contain the applicable information and documents required in 7 CFR part 1710, Subpart D as well as the following information and documentation as applicable based upon the…