"Literally thousands of animals can die when the ventilation systems in the poultry house or swine castle are not running for a sufficient length of time, and you can wind up on the receiving end of a very costly claim."

By R. Bruce Wright, CPCU

Many distribution cooperatives serve member-consumers who raise livestock. Some of these growers may have confined livestock such as poultry or swine whose lives depend on a continuous supply of power to handle the ventilation of their confined environment. In the absence of electrical power, these operations can sustain significant losses. Literally thousands of animals can die when the ventilation systems in the poultry house or swine castle are not running for a sufficient length of time, and you can wind up on the receiving end of a very costly claim.

Buyers for major companies who contract with these farmers may have notified them that they need to provide back-up systems to provide power in an outage situation. But, not all buyers have done so, and the small companies in particular may not require their growers to provide such systems. As a result, you may have confined livestock operations on your system that are exposed to a significant risk of loss should your system be down for an extended period of time.

Like any power supplier, co-ops cannot and should not offer any guarantee of continuous, uninterrupted power supply to their member-consumers. But co-ops tend to view their members differently than publicly owned systems view their customers, and part of the difference is a sincere desire to help members minimize, or even eliminate, their loss exposures. One way to help these members, and at the same time give your co-op an opportunity to defend itself from unjustified claims activity, is to provide these members with information that can assist them in deciding how to deal with the potential impact of loss of power.

You should consider sending every member-consumer who has, or potentially could have, confined livestock operations a letter outlining the potential for loss and describing the steps they might take to avoid or minimize losses they might suffer in the event of an outage. Below is a first draft of a notification letter that Sandean has created to serve as a starting point for you. Please feel free to use what you like from it and adapt it to meet the specific needs of your situation. While I can't guarantee it will solve your problems with confined livestock operations and their possible claims, it should provide these members with both a warning and some useful information, and provide you with some documentation to show that you have done what you can to serve the needs of your member-consumers by alerting them to the potential problem.

One caveat. I am not an attorney. You should have your own lawyer look it over and, of course, take input from counsel and from your board. This a just a "straw-man" example to help you get started.

(Date)

(Name of member-consumer)
(Street)
(City, State Zip)

Dear (name of member-consumer):

(Name of Cooperative) is a member owned utility. As such, we strive to provide all of our member-consumer owners with the best possible service while maintaining fiscal responsibility. Part of that service is an effort to assist you in recognizing, and reducing or preventing, loss from exposures you may face.

At (Name of Cooperative) we do everything we practicably can to provide you with a reliable source of electric power. Unfortunately, the nature of our business makes it impossible for us to offer any guarantee of continuous service. Events beyond our control, such as severe weather, mechanical failures and the actions of third parties, may create an interruption in our service to you. Since these events are not subject to our control we are typically not going to be able to alert you beforehand as to the timing or duration of an outage. Such events are inherently unpredictable and the restoration of service is dependent on a variety of issues, including of course the nature and extent of the initial cause.

As a result, there are some steps you should take as a prudent person if your situation puts you at risk for loss during an outage. If, for example, you have confined livestock operations that depend upon electricity to maintain a healthful environment for your animals, you should arrange for an alternative source of power in an emergency. Most often this is provided through the use of an emergency back-up generator. Your electrician and/or your equipment supplier can advise you on the type and size of system your equipment may require. We strongly advise you to seek a professional to provide for the installation of any such system to insure that the system will meet your needs, and to ensure that the installation meets the requirements for isolating your wiring from that of our distribution system when it is in use.

Ideally, your back-up generator could be equipped with automatic sensing devices that detect an outage, isolate your wiring from the distribution system, and start your generator, all without the need for human intervention. Such systems are costly, however, and in the alternative you should see that any system you install is at the very least equipped with an alarm and paging device that will automatically notify you of an outage. This will allow you or your representative to be alerted to the outage and the need to start the generator. Obviously, a back-up generator is of no help if no one is aware of the need to start it!

Generally speaking, most of our residential member-consumers do not need to provide such a system since service interruptions are typically rare and brief. From time to time, however, a longer duration interruption may occur. Special needs members and those who have exceptional exposures to loss should consider taking exceptional steps. If you have any questions, please feel free to call us at (co-op telephone number).

Sincerely Yours,



(Name, Title)