Bond Buyer Quotes LPPC in its Article "Public Power Alarmed by FEMA Reform"
In a recent Bond Buyer article entitled "Public Power Alarmed by FEMA Reform," Scott Sowers addresses public power's response to the President's FEMA Review Council's Final Report, which proposes lowering the federal cost-share from a 75% base to a 50% floor in addition to replacing FEMA's current documented-cost recovery model, with a parametric formula-based disaster cost recovery process called the Reformed and Partnered Initiative for Disasters (RAPID). The proposed parametric system would establish pre-defined event criteria using variables like wind speed and flood depth to determine relief levels - and looks to include private insurance cost recoveries to subsidize the federal cost-share. The direct-funding mechanism would administer funds to states within 30 days of federally-declared disasters, and be distributed and managed locally.
In it's 22-page letter addressed to the Department of Homeland Security on its Final Report, LPPC said:
"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."
"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."
