Electric cooperatives expected to lose $10B in revenue due to COVID-19
New research by the National Rural Electric Cooperative Association (NRECA) finds that the nation’s electric cooperatives could see $10 billion in lost revenue through 2022.
Revenue for electric co-op operating is expected to decline by $7.4 billion through 2022 due to lower U.S. economic output. Further, a surge in unemployment along with moratoriums on service disconnections in 46 states will increase the balance of unpaid electric bills to $2.6 billion through 2022.
“The economic health of electric co-ops is directly tied to the wellbeing of their local communities,” NRECA CEO Jim Matheson said. “As the economic impact of this pandemic spreads, electric co-ops will be increasingly challenged as they work to keep the lights on for hospitals, grocery stores, and millions of new home offices. Policymakers should be mindful of the economic threat facing rural communities and their electric cooperatives by taking steps to prevent the possibility of significant disruptions.”
Not-for-profit electric cooperatives are owned by the communities they serve and return excess revenues to their consumer-members. Lost revenue can hurt their ability to meet the needs of their community.
“Electricity powers the American economy and a stalled economy uses less energy,” Russell Tucker, NRECA’s chief economist, said. “As GDP growth falls in the wake of COVID-19, co-op electricity sales are projected to decline. We expect reductions in electric co-op sales of 6.1 percent in 2020, 6 percent in 2021, and 3 percent in 2022, for an overall drop in sales of 5 percent over the period when compared to pre-COVID-19 projections.”
NRECA recently reached out to Congress outlining six steps policymakers should take to establish a safety net for rural communities and electric co-ops.
