For the first time in SVEC’s history, a storm recovery charge went into effect on February 1. While figures are not yet final, our initial estimate of the cost of recovering from Hurricane Idalia is approximately $55 million, making it by far the costliest storm the co-op ever experienced.
While believed necessary to keep the cooperative financially sound, the decision to implement the recovery charge was not made lightly. We understand this situation is difficult and are doing everything in our power to mitigate costs as much as possible while maintaining the reliability of our electric service.
Answers to Frequently Asked Questions
Q. Has the co-op already received reimbursement from FEMA?
A. No. It will be an extended period of time before the co-op receives any funds from FEMA. Furthermore, based on the experience of other entities impacted by Hurricanes Irma and Michael, it will likely take years to receive all reimbursements ultimately approved by FEMA. In any case, FEMA does not reimburse the entire cost of a storm. Meanwhile, the co-op is paying invoices for materials and services used to recover from Hurricane Idalia.
Q. Doesn’t the co-op have insurance against damage caused by storms?
A. Our insurance company, which insures 91% of the electric cooperative market, does not provide this type of coverage. Present coverage is in line with other utilities that do not insure distribution infrastructure such as poles and wires. We review all our insurance coverages every year as part of our risk management efforts. Furthermore, if such insurance was available, it would make a utility ineligible for any FEMA reimbursement. In addition, the ongoing premiums would be high and increase the co-op’s operating costs, resulting in higher rates and bills for members.
Q. Why doesn’t the co-op draw from profits to pay for storm recovery?
A. As a not-for-profit cooperative, SVEC operates at cost, collecting enough money to run and expand its electric grid as needed. That money is used to cover expenses like lineworkers, materials, equipment, etc. In years when revenues exceed expenses, the difference, or margin, is allocated to members and used as operating capital by the co-op. Over time, the allocations are returned to members in the form of retired capital credits (approximately $18 million has been returned to members over the life of the co-op).
Q. Isn’t the Storm Recovery Charge prohibited in the co-op’s Bylaws – specifically Article II, Section 2?
A. No. Article II, Section 2 prohibits taking a member's property (i.e., his or her house or other assets) to pay for co-op debts, and members are not personally liable for any co-op debt or liability. In short, contractors cannot sue individual members for co-op debts owed to them. On the other hand, members are collectively responsible for the costs of operating the co-op, including those related to Hurricane Idalia. Accordingly, passing on these costs to all members via a charge on their monthly bill is permissible under Article II, Section 2.
Q. How long will the recovery charge be on members’ bills?
A. There is not an exact timeframe for the charge. Our commitment to consumer-members is to remove this charge as soon as the necessary funds have been collected.
Q. Is SVEC the only utility with a storm recovery charge?
A. No. According to the Florida Public Service Commission, several utilities in the state, including FPL and Duke Energy, are currently charging a storm recovery fee.