Changing the Calculation for Utilities – pre and post disaster

In order to achieve more resilience after future disasters, all aspects of the cost-benefit calculations that are made about taking pre-event mitigative steps vs. just paying for repair and restoration post-disaster will have to re reassessed. This example about utilities illustrations the fundamental issue.

Hurricane Sandy Alters Utilities’ Calculus on Upgrades; NYT. December 29. Some excerpts follow:

After Hurricane Sandy wreaked havoc with power systems in the Northeast, many consumers and public officials complained that the electric utilities had done far too little to protect their equipment from violent storms, which forecasters have warned could strike with increasing frequency.

But from a utility’s perspective, the cold hard math is this: it is typically far cheaper for the company, and its customers, to skip the prevention measures and just clean up the mess afterward.

Utilities and policy makers can see that ocean surge poses a previously unexpected threat to the power grid. And there is growing recognition that the true cost of disruptions, in terms of gasoline lines, lost workdays and business sales, and shivering homeowners, is far higher than the simple dollars and cents spent to protect the power system. A recent report from the National Academy of Sciences about the vast 2003 blackout in the Eastern United States determined that the economic cost of that disruption was about 50 times higher than the price of the actual electricity lost, and that didn’t take into account deaths or other human consequences.

“We need to think now of not just restoring the grid, but how to make it more survivable,” said Philip B. Jones, president of the National Association of Regulatory Utility Commissioners, a trade association of state officials. “I think most commissioners are coming around to that.”

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