In the face of severe storms, utilities are investing billions of dollars in grid hardening to boost electricity resilience. But in the aftermath of such storms, vast numbers of restoration workers have also proven key to bringing power back fast. And those workers can add up to significant, and potentially repeating, costs.
This summer Andea Scott, a 2019 UCS Schneider Fellow, spent time reviewing some of these hardening and restoration numbers. In this blog, Andea walks through one particular aspect of restoration costs that surprised her, and the complex questions she found it raised when looking ahead to a future with more severe storms. Here, Andea:
With hurricane season underway, communities and states are on alert for the signal to start battening down the hatches in preparation for tropical storms and hurricanes. These storms routinely batter the Caribbean, East, and Gulf Coasts, and climate change is threatening to worsen the intensity of such storms over time.
Hurricanes can have devastating impacts on communities. Millions of people can lose power, and some can be left without electricity for weeks at a time. As a result, hospitals, senior centers, and emergency centers—to name a few—may find it difficult to provide care to the most vulnerable of populations. For some, a lack of air conditioning due to the loss of electricity may mean the difference between life and death.
In order to combat the detrimental impacts of losing electricity, some utility companies have invested significant amounts of money to storm harden the grid. Florida’s approach to storm hardening has included its public service commission requiring 3-year storm hardening plans—with 10-year plans on the horizon—for all investor-owned utilities. Each year, these Florida utility companies must report on their storm hardening efforts, which are centered around 10 initiatives. These initiatives include hardening tactics that target vegetation management, transmission structures and inspections, and recovery plans. Florida Power & Light (FPL), for example, spent more than $3 billion between 2006 and 2017 on storm hardening.
However, investing in storm hardening doesn’t mean that there won’t be costs related to grid restoration in the aftermath of storms. In fact, restoration costs can still be quite high.
Let’s consider the case of a recent storm which impacted much of Florida: Hurricane Irma in September 2017. Summing Irma’s total damage costs across all impacted parts of the United States makes the storm the fifth costliest U.S. hurricane on record. FPL’s system was hit hard. According to utility commission dockets, despite having already invested more than $3 billion in grid hardening, FPL still reported Transmission and Distribution (T&D) restoration costs to the tune of over $1.3 billion after the storm.
Where did these costs come from? And what do they tell us about electricity grid resilience? A look at the itemized utility restoration costs incurred by FPL following Hurricane Irma shows an interesting story.
Why such high restoration costs?
Some may assume that the majority of restoration costs would be a result of the materials and supplies needed to fix infrastructure, such as waterlogged substations or downed power poles. However, the facts paint a very different picture. Of that $1.3 billion, 70%, or $930.3 million, was a result of the numerous contractors hired for restoration efforts. Meanwhile, $42.6 million went towards materials and supplies—a drop in the bucket by comparison.
What role do restoration workers play in hurricane response?
Pre-positioning workers is an important tool for decreasing the time it takes to get the lights back on, and mutual assistance facilitates the mobilization of people and resources on an enormous scale.
For Hurricane Irma, FPL called upon 6,000 of its own employees and about 22,000 individuals outside of the company. Many of the external individuals were drawn from the Southeastern Electric Exchange (SEE) Regional Mutual Assistance Group (RMAG). This feat would not have been possible without the mutual assistance provided by the RMAG, as the sheer number of external restoration workers needed was almost four times the number of employees that FPL allocated.
In considering this effort, it’s interesting to compare FPL’s Irma experience with what occurred in 2005 due to Hurricane Wilma. For Irma, FPL’s restoration costs were higher. However, power was restored much more quickly, and 95 percent of FPL customers impacted by Hurricane Irma had their power restored in 7 days, which is a little more than twice as fast as the restoration time for Hurricane Wilma (15 days).
FPL also pre-positioned a record number of restoration workers in advance of Hurricane Irma—including doubling the number of tree-trimming crews compared with those for Hurricane Wilma. The hardened sections of the grid, for the most part, performed better during Irma than the sections left unhardened. These large-scale efforts combined to contribute to a hastened pace of recovery.
|FPL Restoration Times for Hurricane Wilma (2005) and Hurricane Irma (2017)|
|FL Landfall Maximum Sustained Winds||120 mph||115 mph|
|Customers Impacted||3.2 million||4.4 million|
|Percentage of Total Customers||75%||91%|
|50% of Customers Restored||5 days||1 day|
|75% of Customers Restored||8 days||3 days|
|95% of Customers Restored||15 days||7 days|
|Essentially Restored1||18 days||10 days|
|Average Time Without Power||5.4 days||2.3 days|
1FPL defines this as restoring at least 99 percent of customers.
Credit: FPL filing, utility docket 20180049-EI, found here.
How does mutual assistance work?
Utility companies can voluntarily be a part of an RMAG. These groups are consortiums of utility providers which have banded together to train and help one another in times of crisis. This arrangement allows companies to borrow restoration workers and equipment from one another in addition to sharing knowledge among their consortium. RMAGs developed decades ago as utility companies learned how to best respond to storm damage. Even today, mutual assistance is constantly being improved upon as each storm brings a suite of new lessons for these companies.
For example, following the aftermath of Superstorm Sandy, which hit the Atlantic Coast in 2012, it was decided that the numerous small RMAGs needed to be consolidated. Consolidating allowed for a broader network of support and better coordination among participating utility providers. Additionally, protocol for industry-wide disaster events, or National Response Events (NRE), was determined by the Edison Electric Institute. NRE protocol gives clearer direction in the case of disasters which span multiple RMAG boundaries.
Will restoration costs always be this high?
In short, it’s complicated. On one hand, for the most part hardened parts of the grid did perform better during Irma than those left unhardened, undoubtedly speeding up recovery times. On the other hand, the record number of workers assembled to assist in the recovery effort were also critically important and may continue to play a central role in storm restoration efforts over time.
Importantly, there is still significant room for controlling costs in this area. In fact, the recent decision to approve FPL’s costs for Hurricane Irma included a stipulation that the utility company agree to roll out a new cost tracking app. This should streamline major parts of the response and logistical operations and also limit the potential for unduly high costs.
Megastorms are here to stay
Every storm is different, but one thing is certain: the likely increasing frequency of severe storms in the face of climate change. It follows that the billion-dollar storm problem will not be going away any time soon. With this in mind, utility companies must not lose sight of the end goal: minimizing the time to restore power, as this saves lives.
Taking these factors into account, many utility companies are spending more to harden the grid—like FPL– which, on top of the nearly $4 billion invested in grid hardening to date, has pledged to invest an additional $2 billion over the next 3 years.
However, in FPL’s most recent major test, Hurricane Irma made one thing very clear: it isn’t just grid hardening that costs a lot. Restoration does, too—even after billions of dollars in storm preparation. And that is in significant part due to the large mobilization of people and resources still needed to bring power back quickly. The costly question is whether or not these restoration expenses will diminish with time.