Kootenai Electric Cooperative Inc., a member-owned rural electric utility that serves mostly North Idaho residents, has been approved by the federal government to receive a $51.7 million multiyear loan, which it says it plans to spend mostly on system upgrades and possibly on expansions to meet growth.

The co-op, which serves more than 22,000 members in parts of Kootenai, Benewah, Bonner, and Spokane counties, applies for such loans from the U.S. Department of Agriculture every three to five years to finance its capital needs. It obtained its last such loan in 2004, for about $28.6 million, says Larry Bryant, its marketing manager. The larger amount this time around is partially due to the increased cost of materials, such as copper, used in utility wires, Bryant says.

"It's a normal course of business that we apply for these loans," he says.

Yet, in the last 10 years, the co-op has experienced an unusually fast annual growth rate of 5 percent to 7 percent in terms of new customers, he says. About 70 percent to 80 percent of its members are residential customers.

Kootenai Electric's four-year work plan had anticipated growth of almost 1,200 new members a year, but because of the economic slowdown, the co-op now projects it will add just 400 new members a year, he says.

Kootenai Electric is one of more than 900 electric cooperatives that are eligible to receive the funding, and the USDA has a $6.6 billion annual budget for such loans, Bryant says.

The Hayden, Idaho-based co-op based its recently approved loan request on a four-year work plan for capital projects that covers the period from 2009 to 2012, Bryant says.

Kootenai Electric maintains nearly 2,000 miles of electric lines and buys all the electricity it sells from the Bonneville Power Administration, Bryant says. It employs 75 people and says it's the largest electric cooperative in Idaho.

The $51.7 million federal loan authorization carries an annual interest rate of 5.5 percent and matures in 2043, and the co-op will use it like a credit line, Bryant says.

Before it can draw on the loan to pay for a construction project, Kootenai Electric must complete work on the project to the USDA's standards, Bryant says. The co-op will borrow only what it needs for growth and upgrades to maintain reliability, and it's possible it won't end up borrowing the entire amount, he says.

"We will spend the money as we see appropriate," Bryant says.

He adds, "The growth has really fallen off. We will probably be able to stretch these dollars over more than four years."

Planned construction is expected to include two new substations and improvements to distribution lines, Bryant says. The co-op is looking at locations for the new substations, and will select locations based on its growth, which mostly is expected to occur in Kootenai County, he says.

It hasn't decided when it will start any of the planned construction projects, but also expects to do some system extensions, replace deteriorating power poles, and buy additional and replacement transformers.

Kootenai Electric's own line crews will handle much of the work, although some projects, including site development for new substations, some structural construction, and installation of security fencing, will be contracted out, he says.