Electric cooperatives are facing financial hardships as are many businesses. A recent report from the National Rural Electric Cooperatives (NRECA) put perspective on the issue.
“Not-for-profit co-ops throughout the nation are facing severe budget shortfalls as businesses and factories falter and residential members struggle to pay their bills because of COVID-19 restrictions.” That is according to the NRECA newsroom.
The news story provided some examples of the tough times.
A Mississippi power association says that about 90 percent of the members typically pay their electric bills on time, but that is now about 50 percent. That equates to a $5 million loss if the bills do not get paid. A loss of tourism was noted as one cause for concern.
North Carolina’s Curtis Wynn, president and CEO of Roanoke Electric Cooperative, is also leader of NRECA. In his coop there has been a 50 percent increase in unpaid bills 60 days old. “That all adds up to more than 7.5 percent of the average monthly revenue for the Aulander-based co-op, said Wynn. He fears things will get worse because of the growing unemployment rate among the co-op’s members, who have lost jobs as restaurants, barbershops, and salons have closed,” says the NRECA story.
The story notes a South Carolina coop, too. “Berkeley Electric Cooperative returned nearly $5 million in security deposits to its members, who are losing tourism jobs in the Charleston area during the pandemic. The number of delinquent member accounts has nearly doubled from the usual rate of about 10 percent, said Dwayne Cartwright, president and CEO of the Moncks Corner-based co-op.”
A Colorado coop call center has gotten double the calls from members who need help. The power company has been arranging payment plans, and “it’s also offering 1.5 million in capital credits and $500,000 in its Pandemic Payment Assistance Fund to members to help them pay their bills.”
The fallout from the pandemic and business downturn can be long-term. “Economic disruptions related to the pandemic will drive electric co-op sales down by 6.1 percent in 2020, 6 percent in 2021, and 3 percent in 2022, for an average loss of 5 percent over the period when compared to pre-COVID-19 projections, according to NRECA estimates.”
That story also says that at-risk co-op communities, which include energy extraction, transportation and tourism, could lose 2.5 million jobs. The U.S. has more than 900 electric co-ops and serves 42 million Americans.
While the pandemic is certainly a healthcare challenge, the business challenge in the electric industry is coming into greater focus for energy companies and their customers, too.