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Southside Electric Co-Op president defends ice storm response, million-dollar compensation

Posted at 11:07 AM, Mar 12, 2021
and last updated 2021-03-12 19:52:38-05

DINWIDDIE COUNTY, Va. -- When a February ice storm hit Virginia, tens of thousands of Southside Electric Cooperative (SEC) members lost power. For thousands of members, that outage lasted more than a week.

The CBS 6 Problem Solvers heard from countless frustrated members who were upset with SEC leaders.

They wondered how 81 percent of SEC's members could lose power and be out for so long and asked the Problem Solvers to investigate a number of questions about preventative maintenance, vegetation management, and compensation for board members and the president.

SEC President Jeff Edwards agreed to sit down this week and answer those questions.

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Melissa Hipolit
This refers to the February 2020 board minutes, and in there, there is something called System Average Interruption Duration Index (SAIDI).

It looks like an index of major event days and how many outages you had, and from what is in the minutes it looks like SEC was ranked poorly among co-ops in terms of outages, can you tell us about that?

Jeff Edwards
That is an index, it does track the outage performance of our system, it depends upon which systems you're comparing us to.

You have to remember our system is different than an urban system, and our system is different than a rural system in other parts of the country.

We have 8,300 miles of line that we maintain. To put that in perspective that would go from the coast of Virginia to the coast of California, back to the coast of Virginia, and back to the coast of California, and back into the Midwest. Almost all of our system is lined with trees. If you go into Kansas, rural system, no trees.

Trees are our number one cause of outages.

We monitor SAIDI constantly. We give a monthly report to our board and over my 14-year career here, we've seen that decrease dramatically, which means it's an increase in performance and reliability.

Edwards' staff later provided subsequent information that stated: "SAIDI is the average time in minutes that the average member in our system is without power each year...and SEC has seen its SAIDI fall from 398 minutes in 2007 to 266 minutes in 2020."

Melissa Hipolit
So in this February 2020 minutes it says (SAIDI) 68th out of 74 (among National Rural Electric Cooperatives), and then 10th out of 13th (among Virginia, Maryland, and Delaware Association of Electric Cooperatives). That doesn't seem like a high ranking.

Jeff Edwards
It may not be a high ranking but it depends upon who we are being compared with. If they're not like-type systems it's an apples and oranges comparison.

In the SEC February 2020 board minutes, it did state that SAIDI comparison involving rural cooperatives did "include those with tree cover.

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Melissa Hipolit
Reductions in vegetation management spending between 2016 and 2019, and reductions in operations maintenance programs were listed as challenges to previous goals with system interruption, so did you have vegetation management spending reductions over those three years?

Jeff Edwards
The way a co-op works is all of our revenue comes from our members, and with the way our rate system works in Virginia, because we are regulated by the SCC, as you get toward the end of a rate cycle you have less money, less margins to do the programs we typically do.

They may have been reduced slightly, it would have been only slightly, and if you would look at our numbers for this year and last year, you see that increase in spending is back again because we are at the front end of a rate cycle.

Melissa Hipolit
So vegetation management seems like one area where you would absolutely not want to cut if you're saying tree maintenance is number one for you in terms of trying to prevent outages on your lines.

Jeff Edwards
Vegetation management is our largest expense here at the co-op bar none for our operations and maintenance expense, even if we reduce that it still remains our largest expense.

Melissa Hipolit
Is it possible you could increase your spending with vegetation management?

Jeff Edwards
We have already done that, that has been increased in the budget for this year.

Melissa Hipolit
How much did you increase it?

Jeff Edwards
It's up to over $5 million for this year. It's at least a 40-45 percent increase over last year.

Melissa Hipolit
When did you make that decision to increase it?

Jeff Edwards
That decision was made after the rate increase and during our budget process that is approved by the Board of Directors.

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Melissa Hipolit
So if you look at, I think it was $2.8 million spent in 2018 (by SEC) with the top five contractors, and then in Mecklenburg (Co-op) it was around the same, but (members are) saying the miles of lines they maintain in Southside are so many more than in Mecklenburg, so the amount of spending per mile of line is a lot more with the Mecklenburg Co-op, how would you respond to that?"

Jeff Edwards
The data you find on the 990 showing some of our contractors is not inclusive of all of our contractors, it's only the top so many based on the compensation of those particular companies, so we do have other companies that may not be reflected there because the amount of pay for them is less, and we do use our own lineman to do a lot of our own tree work.

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Jeff Edwards
This storm was a significant storm for us. It was the worst in the co-op's history regarding damage.

The majority of the outages were created by trees that fell on the line and less than five percent of those were actually inside the prescribed right of way that we can legally maintain.

We currently maintain a 30 feet right of way, that is what we are legally able to do, if we want to increase that we would have to seek approval from our membership and get easements along all of those lines.

We can't just expand without all those easements, and the costs which I can't get you an exact figure would be well over $1 billion if we expanded to 100 feet right of way.

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Melissa Hipolit
I pulled numbers related to Mecklenburg, at the peak of this they had fewer outages than you did at the peak.

I think you were at 81 percent and they were at 58 percent.

So they're saying if they got the same weather, why didn't they have the same percentage of outages? How do you explain that?"

Jeff Edwards
The heavy icing appeared almost like a bull's eye on the center of our service territory. We were indeed the epicenter of the ice storm and that heavier ice impacted our system in a much more detrimental fashion than it did the Mecklenburg system.

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Melissa Hipolit
Explain to your members how you got to this $1.5 million [salary] that you've gotten in 2018 and 2019.

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Jeff Edwards
The executive management compensation level at SEC is in line with other Virginia electric co-op executives.

It's based partly on the size of the co-op and partly on the service level of the individual, along with some other performance factors.

The 990 form doesn't do a good job of separating out salary from a retirement benefit and that retirement benefit for me has been accrued over a 36-year career in the electric co-op program.

Those funds have been placed in there by the two co-ops I worked at previously, along with Southside Electric Co-Op that I've worked at for the past 14 years.

Melissa Hipolit
Your members would ask is this fair that Southside Electric has been paying all this money toward this retirement benefit on top of this salary that seems like a great salary, I mean half a million dollars?

Jeff Edwards
The same benefit level is applied to every Co-op employee including myself, so the benefit level for me the only reason the dollars are greater is because my salary is greater.

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Melissa Hipolit
Comparing salaries among board members in co-ops in Virginia it looks like the board members at Southside are getting more money than many other board members, including the chairman who is getting the highest I could find among several co-ops in the state?"

Jeff Edwards
They are a community-led organization, they represent their membership quite well, they do compare their salaries to other co-ops of like size and that is based again on a report that is provided by the National Rural Electric Co-op Association every other year, and that is how they determine their compensation levels.

When asked what changes he might make going forward, Edwards said the co-op would explore adding another call center to take outage calls, and he said it will work to improve its communication with the public.