Arkansas Public Service Commission Challenges Clay County Electric Cooperative's Proposed Insurance Requirements

Strategic Insights -

The Arkansas Public Service Commission (APSC) has issued a document expressing concerns over the proposed insurance requirements for distributed resources (DR) by Clay County Electric Cooperative Corporation (CCECC). The proposed requirements, which would see ratepayers purchase commercial general liability insurance policies with a minimum coverage of $1,000,000 per occurrence and $2,000,000 aggregate limit, have been deemed excessive by the Commission. General Staff witness Jeffrey Bower has pointed out that CCECC's requirements significantly deviate from the norm set by comparable utilities, with the proposed requirements being substantively more restrictive than those for similar cooperative utilities.

Key Takeaways:

  • CCECC has proposed a tariff that would require ratepayers to purchase commercial general liability insurance policies with a minimum coverage of $1,000,000 per occurrence and $2,000,000 aggregate limit.
  • The APSC asserts that CCECC has not provided sufficient support to justify the level of insurance coverage and endorsements in the proposed tariff.
  • General Staff witness Jeffrey Bower has concluded that there is no evidence of specific locational risk that merits the level of insurance requirements CCECC is proposing.
  • CCECC's proposed requirements, including those for umbrella or excess liability coverage and waiver of subrogation endorsement, are deemed unnecessary by the Commission.
  • The proposed requirements would disproportionately affect customers and may increase premium costs.
  • A comparison of the proposed requirements to those of similar cooperative utilities reveals that CCECC's requirements are substantively more restrictive.

Statistics:

  • The minimum coverage required by CCECC is $1,000,000 per occurrence with a $2,000,000 aggregate limit.
  • The proposed requirements include umbrella or excess liability coverage of $10,000,000 for DR facilities with an aggregate size of 2,000 kW or above.
  • The Panel has deemed the proposed requirements to be substantively more restrictive than those of similar cooperative utilities.
  • CCECC's proposed tariff would result in a significant increase in insurance premiums for customers.

Sources:

  • 7 CFR § 1730, Subpart C - General Staff's Opening Statement
  • Docket No. 22-043-U, Doc. No. 1, p. 4 - Arkansas Public Service Commission Docket No. 22-043-U
  • Docket No. 16-027-R, Doc. No. 650 and 651 - Arkansas Public Service Commission Docket No. 16-027-R
  • Docket No. 24-055-TF, Doc. No. 23, p. 11 - General Staff's testimony
  • Docket No. 24-055-TF, Doc. No. 29, p. 6 - General Staff's witness testimony
  • Docket No. 24-055-TF, Doc. No. 32, Joint Issues List and Hearing Recommendations, p. 1, footnote 2 - CCECC's objection to the other parties' framing of Issue No. 1