One year later, Sandy drives grid resiliency…and highlights an uncomfortable question

The silver lining in Sandy's cloud was a renewed focus on grid resiliency. The question: who will pay for it?

The one-year anniversary of superstorm Sandy this week prompted the usual flurry of discussion over Whether This Could Happen Again and what should be done to ensure This Never Happens Again. ABB made its contribution via a sponsored event [video] in Washington on Wednesday hosted by The Hill, a daily newspaper focused on Congress.

The policy breakfast featured a brief keynote followed by a panel discussion centered on grid resiliency. A few interesting points came up, though the takeaways were a bit different than might have been expected.

Ananda Kanapathy, Director of Electric and Gas Asset Strategy at Public Service Electric & Gas of New Jersey, provided an update on his firm’s experience during Sandy and the subsequent lessons learned. PSEG experienced 45,000 individual points of damage to their network, putting 90 percent of their customers in the dark. The restoration effort involved crews from PSEG and other utilities totaling over 4,000 workers.

PSEG has outlined a comprehensive “Energy Strong” program that includes investments in system hardening and recovery technology as well as changes in processes and procedures.  If and when it is fully implemented, the company expects an average of 40 percent improvement in restoration times during major storms.

While the investments in technology will require regulatory approval, Kanapathy said the company has already implemented a variety of process changes based on experience during Sandy. This is important, because no amount of spending will ever make a grid 100% reliable. In fact, how a utility performs when the chips are down has as much to do with how they use the systems they have as it does with the technology itself.

As ABB’s Gary Rackliffe pointed out, there are two reasons people call their utility during a storm: to report an outage, and to find out when power will be restored. Smart meters can automate the first part, sending a “last gasp” signal to the utility control center to indicate power has been lost. That’s a straight-up technology solution.

The second part, however, is a communications issue. Part of it can be addressed with technology (e.g., the better the utility’s internal systems, the more accurate they will be in estimating restoration times), but part of it has to do with how the utility operates. For example, with the proliferation of social media, how hard would it be to provide status updates via the company Twitter account? Indeed, some utilities are already doing this, but look for such communications to become more common in the future.

The event moderator, The Hill’s Ben Geman, steered the discussion towards climate change and related policy, but ABB’s Rackliffe was quick to point out an important distinction. While the energy-climate discussion typically centers on generation (i.e., reducing the use of fossil fuels, notably coal), it’s the transmission and distribution system that is hardest hit during major weather events. And, most of that is concentrated at the distribution level.

During Sandy, it was a combination of high winds and a large storm surge. There is only so much any utility can do to protect against the prospect of having five feet of water in facilities located half a mile away from the shoreline. In fact, it’s highly unlikely that anyone would be willing to pay to make their grid flood-proof to such a standard. Utilities already face an uphill battle getting reliability enhancing projects approved by regulators even when they offer a proven business case.

This brings us to what was perhaps the elephant in the room, namely that the cost recovery model the electric power system has relied upon for more than a century is dangerously outmoded. Demand (i.e., the sale of electricity) is actually declining, due to a combination of factors that include both improving efficiency and the growth of distributed, often renewable, generation. Meanwhile, utility costs are increasing as their assets age.

At some point, it seems clear that power customers at all levels will need to shift from paying for megawatts toward paying for the infrastructure that delivers them. Some kind of grid connection fee will be needed to ensure utilities have the funds to make the necessary investments in reliability. No one is willing to go without a reliable grid, even if their home or business is electrically self-sustaining. Therein, of course, lies the problem: everyone wants reliability in their power system, but no one wants to pay for it.