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Alliance Co-Managers' Report - 2010

Challenging times for members and employees

by Donald A. Franklund and Clayton O. Hoffman, Alliance Co-Managers

The first storm began on Jan. 19, as the worst-possible weather conditions descended on western North Dakota. First came the fog, then the rain, and finally the snow and wind. For nearly three weeks, we battled difficult weather conditions, snow-filled roads and right-of-ways. Getting the crews access to repair the damage went extremely slow because of the amount of snow that had to be removed.

The amount of snow, and the immense territory that had severe damage, is what made the storm different from any other one we have had to deal with. Twelve cooperatives in North and South Dakota had substantial damage. This covered an area 200 miles wide, stretching from the Montana border across two-thirds of the state, with more than 15,000 poles on the ground.

With that amount of damage, we had to use contractors from all over the United States who supplied us with hundreds of lineworkers and lots of equipment. Coordinating more than 120 construction workers, keeping material available, and getting miles of snow removed was a tremendous burden for all of the employees of Mor-Gran-Sou. Working 16-hour days in terrible weather conditions is a challenge; especially when it goes on for three weeks. But this was just a warm-up for what lay ahead.

Beginning early on April 2, a wet snow began to fall. At times it was so heavy that it snowed small snowballs. By 7 a.m., it had coated the lines with more than nine inches of snowy ice. Then a 40-mph wind came through the area, knocking down almost all of the cooperative’s east-west power lines.

The Good Friday storm is one of the worst ice storms to ever go through the northern Great Plains. In addition to Mor-Gran-Sou’s damage, the Western Area Power Administration lost more than 60 230-kilovolt (KV) steel towers between Mandan and New Salem. Minnkota Power Cooperative lost 345 KV towers north of Bismarck. Roughrider Electric Cooperative lost more than 600 poles and Capital Electric lost more than 500 poles.

Mor-Gran-Sou’s response was quick. Our line crews were out working on Good Friday, restoring power where they could; moving downed or sagging power lines off highways. By Friday night we had men and material coming to help.

Line crews began to show up on Saturday, and by the Monday following Easter we had more than 200 lineworkers on the system. By Wednesday, we had nearly 500 people working on the disaster. After nearly four weeks, we had power to all the homes on the system.

In the end, we estimate that between the two storms, Mor-Gran-Sou lost more than 10,000 poles. Because of new construction standards, we needed to install more than 12,000 poles. The restoration cost for the two storms is reaching $35 to 40 million just to turn the lights back on.

The magnitude of the April storm, coupled with the January storm, is going to require several years to complete permanent repairs. Our crews have been out replacing anchors and checking highway crossings to make sure we have the necessary clearances. We hope to have power restored to pasture wells and general right-of-way cleanup completed later this summer.

We will be working on conductor replacement and re-sagging of the line throughout the summer and into next year. We have a number of miles of line that need to be straightened and tamped. Based on what we see at this time, we estimated it will take an additional $5 million to complete the repairs, bringing the overall total cost of the storm between $40 and $45 million.

At this time, we are working with representatives with the Federal Emergency Management Agency (FEMA) and the state of North Dakota to complete the necessary paperwork to qualify for grant funds. In total, FEMA will pay 75 percent of all qualifying costs and the state will pay 10 percent. This leaves 15 percent for Mor-Gran-Sou to cover. In addition, there are some costs that FEMA and the state will not cover, of which we will need to pay the entire cost.

Currently, we estimate that Mor-Gran-Sou will be responsible for $7 to $9 million of the overall cost of the storms. Unless we can find additional grant funding, the members will need to cover the annual debt cost associated with this amount.

Since FEMA has not been funded for 2010, we are using an emergency line of credit from the National Rural Utilities Cooperative Finance Corporation. While the interest rate is very low, it will cost us nearly $1 million in interest annually until we receive funds from FEMA and the state of North Dakota.

As you can imagine, this entire situation is still very dynamic and changing constantly. We will have a much better idea of the actual numbers by the time of the annual meeting. Our intention is to give a rate impact projection at that time.

Thank you very much for your patience and tolerance as we have worked through this disaster.

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