Kansas rural electric co-ops receive millions in federal coronavirus relief

WICHITA, Kansas— Fearing what the coronavirus could do to the electric industry, six Kansas electric co-ops applied for and received up to $20 million in total in loans under the federal government. Paycheck Protection Program.

“It looked pretty dark,” said Doug Jackson, the general manager of Rolling Hills Electric Co-op based in Beloit. She received $1.19 million to help support 42 full-time employees.

Electric cooperatives are non-profit organizations that supply electricity to rural areas of Kansas and are managed by their members. That is, they are usually not full of money. Money from customer bills each month is enough to pay for operating costs.

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

“We were worried about dealing with load loss (the amount of electricity people use),” Sunflower Electric Power Company CEO Stuart Lowry said of Hays, “and that loss of load would mean loss of revenue and loss of revenue would require us to raise rates.”

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

One of the main sources of income for Sunflower and its distribution cooperatives is to supply electricity to oil and gas pumps and pipelines. Many of these companies closed their wells in April and May, when the price of oil fell to around $5 a barrel, and even momentarily negative.

The sunflower also provides electricity to many large farms and food industries. At the start of the pandemic, Lowry said there was uncertainty about the ability of these plants to continue operating.

According to the US Energy Information Agency, the amount of electricity sold to industrial customers across the country in April was down 9% from the previous five-year average; for the commercial, it fell by 10%.

State electricity regulators have also mandated that power companies cannot disconnect service for nonpayment.

At first, co-ops worried about what this might mean for their ability to collect. But Wheatland Electric Cooperative Communications director Alli Connine said the issue was not as serious as expected.

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

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

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

“We value our employees very much and if we fire them they may find jobs elsewhere and not come back and then we will have to retrain new people,” Jackson said.

At this point, none of the co-ops the Kansas News Service spoke to know whether they will have to repay the loans (the program has a mechanism that will cancel the loan if a business meets certain requirements.)

But co-op leaders said if it helped sustain the business it would be worth repaying some of the loan if needed.

“We’re really able to pass our loan amount, dollar for dollar, to the electricity consumer,” Lowry said. “Every dollar will be a dollar that we may not have to collect from the taxpayer.”

Brian Grimmett reports on environment, energy and natural resources for KMUW in Wichita and the Kansas News Service. You can follow him on Twitter @briangrimmett or email him at grimmett(at)kmuw(dot)org. The Kansas News Service is a collaboration between KCUR, Kansas Public Radio, KMUW, and High Plains Public Radio focused on health, the social determinants of health, and how they relate to public policy.

Kansas News Service stories and photos may be republished by media outlets free of charge with proper attribution and a link to ksnewsservice.org.

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