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Rural Kansas Electric Co-ops Get Millions in Federal Coronavirus Relief

Electric substation (Photo by Brian Grimmett / Kansas News Service)

WICHITA, Kan. (KNS) — Fearing what the coronavirus might do to the power industry, six electric cooperatives in Kansas applied for - and received - up to $20 million total in loans as part of the federal Paycheck Protection Program.

“It looked pretty bleak,” said Doug Jackson, the general manager of Rolling Hills Electric Coop based in Beloit. It received $1.19 million to help sustain 42 full-time employees.

Electric cooperatives are nonprofit organizations that provide power to rural Kansas and are run by their members. That is to say, they aren’t usually flush with cash. The money that comes in from customer bills each month is enough to pay the cost of operating.

When the coronavirus arrived, electric coop CEOs worried about how it might impact their organization’s ability to pay their own bills. So, some turned to the PPP, part of the $2 trillion economic stimulus package Congress passed in late March to help small businesses keep their workforce employed.

“We were concerned we would face a loss of load (how much electricity people use),” Sunflower Electric Power Corporation CEO Stuart Lowry said from Hays, “and that loss of load would mean a loss of revenue and the loss of revenue would require that we raise rates.”

Sunflower received $10 million in loans to support 423 jobs.

One of the major things that brings in money for Sunflower and its distribution cooperatives’ is providing electricity to oil and gas pumps and pipelines. Many of those companies turned their wells off in April and May, when the price of oil dropped to about $5 a barrel, and momentarily even negative.

Sunflower also provides electricity to many large agricultural operations and food industries. At the beginning of the pandemic, Lowry said there was uncertainty about whether those plants would be able to continue to operate.

According to the U.S. Energy Information Agency, the amount of electricity sold to industrial customers around the country in April was down 9% compared to the average in the previous five years; for commercial it dropped 10%.

State electricity regulators also mandated that electric companies couldn’t disconnect service for non-payment.

At the beginning, the coops worried about what that could mean for their ability to collect. But Wheatland Electric Cooperative Director of Communications Alli Connine said that it hasn’t been as big of a problem as expected.

“We’ve actually been surprised,” said Connine, whose coop is in Scott City. “We’re actually lower (with non-payments) than what we are usually at and I think that’s because we’ve been proactive and encouraged our members to call in if they have payment difficulties.”

Wheatland Electric Cooperative received between $2 and $5 million to support 138 jobs.

Both Lowry and Jackson said the main goal behind applying for PPP loans was to give their organizations options and flexibility.

“We value our employees very much and if we laid them off, they may get a job elsewhere and not return and then we’d have to retrain new people,” Jackson said.

At this point, none of the coops that the Kansas News Service spoke with knows whether they’ll have to repay the loans (the program has a mechanism that will forgive the loan if a company meets certain requirements).

But leaders of the coops said if it helps sustain the business, it will be worth repaying parts of the loan if necessary.

“We’re really in a position to pass the amount of our loan, dollar for dollar, through to the electric ratepayer,” Lowry said. “Each dollar will be a dollar we may not have to collect from the ratepayer.”

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Brian Grimmett reports on the environment, energy and natural resources for KMUW Radio and the Kansas News Service. Follow him on Twitter @briangrimmett

The Kansas News Service is a collaboration of Kansas Public Radio, KCUR, KMUW and High Plains Public Radio - focused on health, the social determinants of health and their connection to public policy.  Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to ksnewsservice.org

 

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