Editor & Guest Writer Peggy Maranan, Ph.D Manager, Financial Accounting LCEC (Lee County Electric Cooperative, Inc.) PO Box 3455 North Fort Myers, FL 33918-3455 Phone (239) 656-2117 peggy.maranan@lcec.net
Introduction The year of 2020 will go down in history, one that will be discussed by future generations. Notably, the Coronavirus (COVID-19) pandemic experienced worldwide will be remembered, with historical comparisons made to the devastation brought on by the 1918 Spanish flu pandemic. While the flu of 1918 was devastating to worldwide populations also, the risk of experiencing another pandemic of that magnitude was far from most people’s minds when COVID-19 became a reality. Most organizations and individuals were not fully prepared for the impacts that COVID-19 has had. Even with the most robust and matured planning programs and risk management models that were in place, most organizations were left not ideally prepared to deal the consequences of COVID-19. While many organizations did have some form of pandemic disaster plan, the realities of the COVID-19 experience proved that many of these plans were not sufficiently designed to deal with the magnitude nor duration of the COVID-19 impacts. Collins (2020) of CommercialRiskOnline, contends that “Covid-19 will be a game-changer for the risk management profession, rewriting the rulebook and changing the way organisations perceive and prepare for mega risks, according to risk management associations” (para. 1). The electric cooperative industry, while typically more focused on disaster planning than many other industries, also found themselves in a position of needing to reevaluate and update existing pandemic plans to address the realities presented 4
by COVID-19. This article will address some of these impacts to the electric cooperative industry in hopes of providing greater insight and understanding of how to better lead going forward in more effective risk management. Industry Risks The Congressional Research Service (2020) recently prepared a report for the members and committees of Congress titled “COVID-19: Potential Impacts on the Electric Power Sector”. In this report, it was noted: The Coronavirus Disease 2019 (COVID-19) pandemic is impacting the electric power sector directly (e.g., illness and fatalities among workers) and indirectly (e.g., reduced electricity sales). Most indirect impacts to date have been caused by the economic effects of the pandemic. Long-term impacts are highly uncertain and likely depend on the pandemic’s ultimate toll on U.S. public health and the economy. (p. 1) The report goes on to further identify four key impact areas, already experienced and expected to continue for coming months: ● Reduced electricity demand – while the electric industry has historically been impacted by weather patterns, COVID-19 has introduced economic risk into the picture. Economic activity has slowed substantially, taking the country into a recession very quickly. Starting in March 2020, many electric companies saw Fall 2020 | The Cooperative Accountant
