Bloomberg BNA – Electric utility Con Edison will conduct an economic analysis to quantify the benefits of preparing its infrastructure for the impacts of climate change, a company official said Feb. 10.
Stuart Nachmias, Con Edison's vice president of energy policy and regulatory affairs, said the analysis will build on the company's $1 billion post-Hurricane Sandy plan to fortify its electric and gas infrastructure against future flooding and other potential effects of extreme weather events.
To help justify these expenditures on the utility side, Con Edison will consider economic benefits to the financial sector or the transportation sector, for example, of avoiding power outages during future storms, Nachmias said.
“There's all these other sectors where everything's interrelated, so how do we take account of the benefit in those other sectors of what we're doing?” Nachmias told Bloomberg BNA at a meeting of the National Association of Regulatory Utility Commissioners. “It's a challenge I think for the industry in total.”
Con Edison's analysis is likely to start later this year, he said.
‘Tough to Do'
Economic analyses related to climate change have so far focused on determining its costs.
“We know when the power goes out, there's a huge economic impact,” Nachmias said.
In 2012, power outages caused by Superstorm Sandy and other extreme weather events cost the U.S. economy between $27 billion and $52 billion, according to Energy Department estimates.
But “we're typically not good at looking at the benefits,” Nachmias said.
Electric utilities haven't quantified the costs of climate change impacts, or the benefits of avoiding such costs, because that kind of economic analysis is “tough to do,” he said.
Calculating the economic risk the U.S. faces from current and potential climate change impacts is the goal of the Risky Business report being prepared by Bloomberg Philanthropies, former Treasury Secretary Hank Paulson and the nonprofit Next Generation.
The report, due out in June, will calculate economic risk from climate change to particular sectors, including agriculture, public health, national security, labor productivity and coastal infrastructure, such as electric and water utilities.
Kate Gordon, executive director of Risky Business, said the report is meant to help the business community bring climate change costs into long-term planning decisions.
“We all need to start from the same dataset, we all need to start from the same understanding of the problem, and then we can have a conversation about potential solutions,” Gordon told Bloomberg BNA.