Southside Electric CEO responds after 242 complaints filed against co-op in ice storm aftermath

Updated: Mar. 8, 2021 at 7:19 PM EST
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RICHMOND, Va. (WWBT) - Since February’s ice storm, 242 complaints from Southside Electric Cooperative members have been reported to the State Corporation Commission. The SCC is now doing a thorough review of Southside Electric’s entire response to the storm.

A week and a half after that ice storm pummeled central Virginia, NBC12 reported more than 13,000 Southside Electric customers were still without electricity and heat, in many cases. By that same time, almost all Dominion Energy customers had their power restored, along with most other providers across the state, according to the website, which tracks outages nationwide.

The On Your Side Investigators asked Southside Electric Cooperative CEO Jeff Edwards why the restoration took so long, with many people having to seek shelter elsewhere.

“The storm for us was unprecedented in the amount of damage,” said Edwards.

Edwards said February’s ice storm and its aftermath caused the worst damage SEC has dealt with since Hurricane Isabel in 2003, costing $20 million for a complete restoration, nearly four times what Isabel totaled.

“If you look at a map that shows ice accumulations, you will see that our territory was the epicenter of this ice storm,” said Edwards.

Southside Electric Cooperative area during February, 2021 ice storm

Source: Southside Electric...
Southside Electric Cooperative area during February, 2021 ice storm Source: Southside Electric Cooperative(NBC12)

NBC12 looked into member concerns over whether enough was done leading up to the weather event.

An examination of tax records reveals that from 2018 to 2019, the amount SEC spent on maintenance was reduced by over $4 million, about a 44 percent decrease. Expenditure on ‘distribution maintenance’ was listed as $9,313,746 in 2018. In 2019, it was listed as $5,228,173. Figures for 2020 were not readily available, according to SEC officials.

“We are like any other business, and our budgets are based on anticipated revenues,” said Edwards. “We were at the end of a rate cycle, and our revenues weren’t as high as they are in the earlier part of the rate cycle. So, we adjust our expenses downward, and it’s not just in that area; it’s travel, training. All areas of our budget are reviewed annually.”

NBC12 asked why revenue would go down if customer accounts appeared to increase, according to other SEC financial documents.

“If you look at the overall percentage of increase for us, (the increase of customer accounts is) a very small percentage. Yet, material cost, poles, wire, all the things we need to maintain our system - they increase much more than the (customer) growth takes care of. So, that’s why you see a decrease in our margins over time,” said Edwards.

According to those same tax 990 forms, much upper management personnel took home more money from 2018 into 2019.

Further, in 2019, Edwards’ base compensation was approved at $504,000, according to SEC board meeting minutes. In 2020, Edwards received a $24,000 raise.

Also in 2020, Southside Electric Cooperative ushered in a rate hike for its approximate 57,000 members.

“All of our compensation levels are in line with other Virginia co-op executives,” he said. “Our pay is based partly on size of the co-op, partly on the experience level of the individual, and then other performance metrics that are reviewed. The pay ranges are based on market, and they’re determined by a third-party consultant. And when you look at us compared to other co-ops regionally and nationally, you’ll find compensation…we are typically in the middle of the pack.”

Edwards’ total compensation is listed as $1.7 million on the 990 tax form, more than double multiple other cooperative chief executive officers in the state. Edwards says that figure includes more than a million dollars in retirement benefits that he began to collect in recent years, a culmination of more than 35 years of built-up funds, working in the same co-op industry. Those retirement benefits then get included on the tax form total, whereas other executives who are not yet collecting their retirement, would not have those figures included. SEC says that nationwide, 883 electric cooperatives participate in the same pension plan, including SEC. Edwards participates in that plan, as do all SEC employees, according to a statement sent to NBC12.

That statement was sent to NBC12 six days after this story aired, with additional, written responses to further clarify these topics.

“There were no cuts to maintenance expense nor were there any salary reductions for any SEC employee,” read a statement emailed to NBC12, when we asked representatives to specifically outline which expenses were cut in the maintenance budget from 2018 to 2019.

“During October 2018, Tropical Storm Michael’s restoration resulted in an unplanned additional maintenance expense of $2,476,000. During 2019, SEC received notice that FEMA relief would be available which reduces maintenance expense. As a result, 2019 maintenance expense was reduced by $1,286,000. Removing the Tropical Storm Michael impact in both years the maintenance expense would have been $10,800,676 in 2018 and $11,784,719 in 2019.”

NBC12 asked about preparation before this specific storm. Southside Electric Cooperative reports having 278 power poles in storage before the storm. SEC ultimately needed to replace 775 downed poles.

SEC customers questioned the age of some power poles, as some are labeled with older dates.

“SEC maintains a robust pole inspection program where each pole is inspected for damage approximately every 10 years,” said SEC representatives in a statement. “Poles are compared to industry standard safety specifications to ensure they meet strength requirements. If the pole fails these tests, then it is replaced in a reasonable period of time. Because of this ongoing inspection and maintenance, a utility pole can last decades before requiring replacement. The age of the pole is not the sole driver for such replacements.”

Edwards says SEC pre-staged over 130 linemen before the storm, with others scheduled to arrive days later. Edwards said they also requested more crews from out-of-state after the storm hit. SEC ultimately needed about 900 crew members to get all of their customers’ power back on.

“In the past 10 years, even with derecho and hurricanes, we’ve never had more than 256 people on our system at more than one time,” said Edwards.

Edwards said Southside Electric is on a seven-year power line maintenance schedule, meaning every section of the power line or the right-of-way surrounding it, should be maintained at least once every seven years. He also says SEC has full-time staff members working to clear trees within 30 feet of power lines.

Central Virginia Electric Cooperative tells NBC12 their right-of-way maintenance is on a five-year schedule. Northern Virginia Electric Cooperative reports its maintenance schedule is three-and-a-half years. Rappahannock Electric Cooperative maintains a five-year maintenance cycle, according to representatives, with a two-and-a-half to three-year mid-cycle inspection for hazard trees. Mecklenburg Electric Cooperative says it scans and targets trouble spots within right-of-way areas every year. On average, MEC reports ‘floor maintenance’ for right-of-way areas every four years and side trimming every eight years.

Dinwiddie resident Michelle Scheid co-started the Concerned Members of Southside Electric Cooperative Facebook group, which has more than 900 followers. She says pictures posted online of downed powerlines surrounded by trees, mostly from hard-hit Dinwiddie, show that SEC has not kept up with tree trimming maintenance.

“There’s just no way,” said Scheid.

“Unfortunately, we have 100-foot tall pine trees beside these lines, and even keeping these right of ways in pristine condition during heavy ice… we’re really in Mother Nature’s hands to determine what the impact will be on our system,” said Edwards.

Scheid and other members say they’re frustrated with the lack of communication during the storm from SEC, not receiving many- if any- texts, calls, emails or social media updates.

“You would think that in 2021 our technology would be improving, but it just seems like we’re stagnant,” said Scheid. “…we don’t have the technology that some other power companies do at this point.”

Edwards agrees that SEC needs improvement in communication. He says they’re considering bringing on an additional outside call center and increasing social media updates.

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