NRECA praised a White House review council’s goal of streamlining the Federal Emergency Management Agency but warned that key recommendations made by the group could hurt electric cooperatives if they are not implemented thoughtfully.
“As natural disasters increase in frequency and severity, we commend the FEMA Review Council’s overarching commitment to programmatic FEMA reform to strengthen preparedness, response, and recovery while reducing administrative burden,” NRECA Regulatory Affairs Director Kelli Phillips wrote on behalf of the association in comments filed June 8 with the Department of Homeland Security.
However, she said, “reform must be tailored to protect rural electric cooperatives and the communities they serve. Without this assistance, many consumer-members living in rural disaster-stricken areas could face significantly higher electric rates.”
In early May, the FEMA Review Council, appointed by President Donald Trump, released a long-awaited report detailing its plan for reforming the agency, which provides crucial aid to co-ops in the wake of hurricanes, wildfires, floods and other natural disasters.
Many of the report’s recommendations would require approval by Congress.
“Although the report is a positive step in identifying opportunities to improve program efficiency and strengthen FEMA’s vital role in supporting resilient critical infrastructure after a disaster, we highlight four key concerns associated with the FEMA Review Council’s Final Report recommendations,” NRECA said.
Those four areas of concern are:
- Creates new funding model: The report proposes to use a “parametric” funding model to determine the amount of assistance FEMA provides after disasters. That model relies on pre-defined triggers such as wind speed, flood stage and similar metrics rather than assessments of actual damage.
While the shift to a parametric model may offer potential benefits in terms of reimbursement speed and predictability, it could undermine access, reliability and fairness if not carefully designed and implemented, NRECA said.
“Funding might not align with the true costs of restoring rural electric systems that often involve extensive line miles and dispersed infrastructure,” the association said.
“Low-density population areas typically have higher costs of service and could be proportionally less supported under any parametric system that fails to account for and consider density.” - Raises per capita threshold: NRECA also warned of disproportionate impacts on co-ops from the report’s proposal to raise the per capita impact threshold for FEMA public assistance. The higher threshold would mean that even severe, costly damage to co-ops’ electric infrastructure may not qualify for relief due to the smaller populations in rural areas.
“Over time, reduced access to federal funding hinders timely recovery and limits investments in infrastructure, including system hardening and resilience measures, increasing vulnerability to future events,” NRECA said. - Reduces federal cost-share: Another troubling recommendation would raise co-ops’ financial risk by reducing the federal cost-share from 75% down to 50% for the FEMA public assistance grant program that co-ops rely on to recover from disasters.
Not-for-profit co-ops “rely heavily on federal cost-sharing after disasters to repair transmission and distribution systems, remove debris, and restore power quickly,” NRECA said.
“A lower federal share would shift substantially more costs back to cooperatives, forcing them to take on debt, defer system improvements, and pass costs on to their consumer-members through higher rates.” - Shifts burden to states: NRECA also questioned the fairness of the review council’s recommendation to shift greater operational and financial responsibility for disaster response and recovery to state, local, tribal and territorial governments.
“States with more robust staffing, experience, and financial flexibility may be better positioned to implement the new program and provide supplemental support, while others may adopt more restrictive or fragmented approaches,” NRECA said.
“This divergence is likely to result in uneven standards for project development, reimbursement, and oversight, undermining reliable and predictable recovery assistance nationwide.”
The harm to rural electric co-ops from these inconsistencies is “compounded by the likelihood of increased competition for limited state-level funding,” NRECA said.
It’s unclear if the FEMA Review Council intends to consider comments submitted by NRECA and other stakeholders or incorporate that feedback into its final recommendations.
As the president and lawmakers consider the next steps for FEMA, NRECA leaders said they will continue to advocate for policies that make the agency work better for co-ops.
An NRECA-backed bill being considered by Congress—the Fixing Emergency Management for Americans (FEMA) Act—would dramatically speed delivery of crucial disaster relief funds to co-ops.
The bipartisan bill would direct the FEMA administrator to reimburse a co-op for emergency work no later than 120 days after it submits a request.
For longer-term projects to rebuild or replace infrastructure, the bill would require FEMA to review within 90 days a co-op’s cost estimate of the work that needs to be done. After that, the agency would have 30 days to disburse the funds for the project. Under the current system, co-ops have had to wait years for reimbursement.
Co-ops also would be allowed to build stronger, more resilient systems in the aftermath of disasters rather than being required by FEMA to build everything back exactly as it was.
The legislation includes a key provision promoted by NRECA that would allow co-ops to be reimbursed for the interest they must pay on loans to perform emergency work and rebuild their systems while they wait to receive disaster funds from FEMA.
Molly Christian and Erin Kelly are staff writers for NRECA.