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North Arkansas Electric Cooperative faces a potential $4 million shortfall from the March tornadoes after learning the Federal Emergency Management Agency will not provide disaster assistance, cooperative officials revealed Thursday.
The funding crisis, disclosed during NAEC’s annual meeting, marks a dramatic shift from historical disaster reimbursements and could force the cooperative’s 38,000 members to absorb millions in storm damage costs through their electric bills.
“We were recently told that FEMA will not cover anything on these March storms,” CEO Mel Coleman told members at the Fulton County Fairgrounds meeting. “We would typically have expected to get about four and a half million dollars from FEMA. Instead, we might get two million.”
The March tornadoes caused an estimated $6 million in damage to NAEC’s infrastructure, destroying 375 poles across the cooperative’s seven-county service area. While Arkansas Gov. Sarah Huckabee Sanders has indicated the state may reimburse 35% of damages, that would still leave members responsible for approximately $4 million in repairs.
The reduced disaster assistance represents a stark departure from previous major storms. During the devastating 2009 ice storm, FEMA and the state combined to reimburse 87.5% of the cooperative’s $41 million in damages, with FEMA covering 75% and Arkansas providing 12.5%.
“If that same storm occurred today, it wouldn’t just cost 24 million, but closer to 33 million,” Chief Financial Officer Julie Haney warned members. “Without any FEMA reimbursement and the state only reimbursing at 35 percent of damages, the cooperative and our members will be responsible for over $21 million of these costs.”
The FEMA denial comes as the cooperative already struggles with negative operating margins and recently implemented a 9.4% rate increase. May 2024 tornadoes had previously cost the cooperative $4 million, though FEMA did provide some assistance for that event.
Coleman emphasized that major storm costs are not included in the cooperative’s rate structure. “What is included, as far as outages, are going to be the average cost of outages that we experience, which is around the million-dollar mark for the past five years,” Haney explained.
Arkansas Electric Cooperative Corporation CEO Buddy Hasten, who spoke at the meeting about wholesale power challenges, added context to the broader infrastructure concerns facing the state’s electric cooperatives.
“2024 tornadoes cost $4 million. We were reimbursed $2-3 million. ’25 tornadoes are going to cost about $6 million; we may get some back, may not,” Hasten said. “You cannot expect members to understand financial burdens and disasters such as these.”
The funding gap comes at a particularly challenging time for rural electric cooperatives, which maintain extensive infrastructure across sparsely populated areas. NAEC operates 5,000 miles of power lines serving two-thirds of north Arkansas’s land area with half the customer density of investor-owned utilities.
Former state representative Lori Benedict questioned the FEMA changes during the meeting, suggesting that federal disaster funds might be redirected to state control.
“What I understand, being a good friend with our current Governor, is that all that money from FEMA will come directly to the state of Arkansas, and it will be distributed through the state,” Benedict said.
Coleman acknowledged the possibility of future changes but emphasized the immediate impact on current storm recovery. “Whether it comes from the states or whether it comes from FEMA doesn’t matter to us. We just appreciate the fact that the governor stepped up, and you know, at least we’re getting 35%.”
The cooperative has not yet received even the reduced state reimbursement. Haney noted that while NAEC finally received $2.7 million in FEMA reimbursements in June 2025 for May 2024 tornado damage, the March 2025 storm assistance remains uncertain.
During the member proposal discussions, Mike Dover, who spoke in opposition to member voting on rate increases, highlighted the precarious situation.
“If the 2009 ice storm happened today at 35% reimbursement, I could come up with about $15.6 million on the $41 million,” Dover calculated. “I noticed this week that Trump’s Administration is starting to come back on FEMA. Looks like it’s going to go down even at less, maybe than 35 percent.”
The FEMA funding crisis adds to mounting financial pressures on rural electric cooperatives, including rising material costs and aging infrastructure replacement. These local distribution challenges compound wholesale power cost increases as AECC, which supplies power to NAEC and 16 other Arkansas cooperatives, must replace coal plants closing in 2028 and 2030 at an estimated cost of $3 billion, costs that will flow through to member bills.
Without adequate disaster reimbursement, cooperatives face difficult choices between maintaining affordable rates and building reserves for inevitable storm damage. Unlike investor-owned utilities, cooperatives cannot tap stock markets for emergency capital and must rely on member rates and borrowing to fund repairs.
“We don’t have any idea about what the weather is going to bring us, and that’s one of our biggest variables,” Coleman said, noting that outage restoration expenses directly impact operating margins and “often cost us millions of dollars.”
The cooperative continues to work with state officials on securing the promised 35% reimbursement for March storm damage while preparing for a future with significantly reduced federal disaster assistance.
