Publicly owned power companies are taking a hard look at proposed reforms of the Federal Emergency Management Agency and reacting with caution about a diminished federal role.
"Reforms must also reflect the real-world costs and operational realities of restoring critical energy infrastructure after a disaster," said Desmarie Waterhouse, senior vice president, advocacy & communications and general counsel for the American Public Power Association.
"Maintaining a stable federal cost-share framework and clear, consistent rules across states will be critical to ensuring equitable and effective disaster response nationwide."
The APPA represents not-for-profit, community-owned utilities that power approximately 2,000 towns and cities nationwide. Public power infrastructure projects often rely on bond financing.
Its comments come via a six-page letter sent to the Federal Emergency Management Agency Review Council earlier this week.
The Council was established by President Trump in January to provide guidance on "the existing ability of FEMA to capably and impartially address disasters occurring within the United States."
The Council rolled out a report in May that included ten major recommendations for making FEMA more responsive to national emergencies including replacing the Public Assistance Program with a parametric block grant model labeled as the "Reformed and Partnered Initiative for Disasters."
A parametric system would establish pre-defined event criteria using variables like wind speed and flood depth to determine relief levels.
The direct-funding mechanism would send money to states within 30 days of a presidential disaster declaration based on pre-defined event criteria. States would distribute and manage funds locally.
The Council also recommends increasing the per capita indicator for a disaster declaration, and imposing annual state minimum disaster expenditure thresholds before a disaster is declared.
"APPA is concerned that collectively these changes would introduce substantial uncertainty as to how and when a federal disaster would be declared."
The report is also taking flak from the Large Public Power Council which has responded with a 22-page letter.
"LPPC supports FEMA reform. The question LPPC raises is not whether to reform disaster recovery, but how to do so without shifting substantial and unpredictable recovery cost and risk onto utilities and the customers who ultimately bear it."
The LPPC represents 29 of the nation's largest public power utilities, operating across 23 states and territories. They have specific concerns about swapping out the Public Assistance Program with RAPID.
"Parametric models work well for a diversified party such as an insurer holding a broad portfolio of risk, because the gap between a formula payout and any single loss averages out across a large enough pool."
"A public power utility is not that diversified party; it is the end claimant with one system and a documented restoration cost, and for a single claimant the formula's error does not average out."
States and local governments rely on FEMA help to rebuild economies hobbled by natural disasters in a timely manner to avoid credit rating downgrades.
According to analysis by the National Association of Counties, "if implemented, these reforms would represent a significant transfer of responsibility – and cost – to the state and local level."
"Counties should expect less federal on-the-ground presence in most disasters, higher thresholds to qualify for federal assistance and greater expectations around local capability and resource management."
The future of FEMA reform and the Council's recommendations remains uncertain and ultimately will require an act of Congress.
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In March, Former Department of Homeland Security Secretary Kristi Noem was replaced by former Senator Markwayne Mullin R-Okla. DHS administers FEMA.
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