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Supply Chain is Top Priority for Co-ops

Electric utilities work to minimize disruptions of key equipment

JULY 2022

by Steven Johnson, Staff Writer

As summer storm season approaches, electric cooperatives are taking steps to deal with unprecedented disruptions in the supply chain for critical electrical equipment.

Manufacturers are quoting lead times of more than 50 weeks for new orders.

At the national level, cooperative leaders successfully advocated for a change in manufacturing transformers, as President Joe Biden signed orders in early June to fast-track domestic production of key grid components.

At the regional level, cooperatives in the mid-Atlantic are working together to bring attention to broken links in the supply chain that they say could threaten timely system restoration if major storms knock vital equipment out of commission.

SUPPLY SHORTAGE

Kentucky-based United Utility Supply Cooperative is the longstanding source for materials and equipment used by electric cooperatives in Virginia, Maryland and Delaware.

Gary Burnett, executive vice president, has been with UUS for more than 40 years and says he has never seen every major item used by its member cooperatives as affected as they are today.

“In the past, we in the utility supply business have encountered supply chain issues with certain products,” he says. “But typically, those issues worked themselves out within a reasonable amount of time, which didn’t have a real impact on cooperatives meeting their daily business needs. Nor did it impact their abilities for emergency restorations.”

Now, however, backlogs exist across the board, with transformers, conductors, meter bases and fiberglass products at the top of the list. Burnett said manufacturers are quoting lead times of more than 50 weeks for new orders on those items and have placed allocations on distributors such as UUS.

“Some manufacturers of these products have ceased taking orders for their products for the balance of 2022. We are currently scheduling with manufacturers for 2023 material needs,” Burnett says.

Some relief may come through Biden’s authorization of the Defense Production Act to cut red tape and boost domestic production of transformers.

“The Biden administration’s use of the Defense Production Act to shorten lead times for supplies of electric transformers is a much-needed step to support reliability and resilience,” says Jim Matheson, president and CEO of the National Rural Electric Cooperative Association, which represents about 900 co-ops around the country.

WORKING COOPERATIVELY

Analysts say solutions require more than a quick fix, though. Freight deliveries, shipping containers, oils used in transformers, paper, computer chips — all are part of a logistics chain overwhelmed by the pandemic, shipping issues, a shortage of workers, supply and demand, global energy prices and the war in Ukraine, among other factors.

Electric cooperatives in Virginia, Maryland and Delaware have taken the lead in action by forming a group to bring the scope of disruptions to the attention of lawmakers and regulatory bodies. The group, called the Coalition for the Advancement of Reliable Electric Systems, plans summits and informational presentations during the next few months.

“It is important that elected officials and regulators understand the unprecedented scope of this problem and the fact that cooperatives are taking steps to deal with it,” says Andrew Vehorn, vice president of member and public affairs for the Virginia, Maryland & Delaware Association of Electric Cooperatives.

Burnett says the Sixth Cooperative Principle of Cooperation among Cooperatives has really taken root during the supply chain crisis.

“Member cooperatives are working together sharing information with one another pertaining to utility products, and helping one another out when they have a need, especially during emergency restoration efforts,” he says.

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