10 Days of Blackouts Cut to 2 After U.S. Utility Spends Billionsby
Smart switches, concrete poles reduced Florida power outages
Spending on grid improvements may also boost earnings
Billions of dollars spent on hardening the nation’s power lines are reducing the time it takes to recover from major storms like Hurricane Matthew and throwing growth-starved utilities a lifeline to better earnings.
As Matthew battered Florida’s East Coast with winds of 120 miles (193 kilometers) per hour earlier this month, the lights stayed on at about 80,000 homes and businesses thanks to switches installed following Hurricane Wilma in 2005, Bill Orlove, a spokesman for NextEra Energy Inc.’s Florida Power & Light utility, said. New smart meters helped repair crews pinpoint outages while concrete utility poles stood up to hurricane-force winds.
Annual power-grid spending by investor-owned utilities has more than doubled to $52.8 billion since hurricanes Katrina and Rita devastated Louisiana and Texas in 2005, according to the Edison Electric Institute, a trade group. These hardening efforts accelerated after it took almost three weeks to restore power to 8.7 million homes and business after tropical cyclone Sandy in 2012.
“It’s smart because it allows them to spend more money on regulated investments, which can boost their rate base and earnings,” Andy Smith, a St. Louis-based analyst for Edward Jones & Co., said Monday by phone. “It’s easy to justify basic safety and reliability investments.”
About 1.2 million FP&L customers blacked out by Matthew had power restored within two days after the storm, the company said. NextEra has spent more than $2 billion hardening Florida’s power grid over the past decade.
“They were really walking the talk,” U.S. Energy Secretary Ernest Moniz said last week at an energy conference in New York. “They invested their own $2 billion in everything from simple stuff like concrete poles rather than wooden poles to making the grid smarter and harder with information technology.”
Moniz said Hurricane Matthew could have left “a lot of” customers without power for 10 to 15 days.
NextEra and other utility owners, faced with weakening power demand, have pitched grid improvements to regulators as customers increasingly demand shorter blackout times. Florida’s utility regulator is mulling the company’s request to spend $1.75 billion more over three years to extend improvements beyond lines serving police and fire stations, hospitals and emergency operations centers.
“Were it not for these improvements, a storm of this magnitude and strength would have resulted in a much longer and more costly restoration,” Eric Silagy, chief executive officer of FP&L, said in an Oct. 13 statement.
It’s too early to say whether Duke Energy Corp.’s own $2.7 billion investment in storm hardening in North and South Carolina since 2004 paid off after Matthew, Bobby Simpson, storm director for Duke said Oct. 14. Matthew, which plowed ashore in South Carolina dumping as much as 18 inches of rain and triggering record flooding, knocked out 115 Duke substations and downed about 284 miles of power lines and 1,900 wooden utility poles.
Floodwaters may keep as many as 13,000 people blacked out for weeks, partly from damaged substations -- the collection of wires and transformers that dispatch power to homes and businesses.
“We’ll be going back and reviewing our plans and investment priorities,” said David Fountain, president of Duke’s North Carolina utility.
Meanwhile, in Los Angeles, about 17,000 customers were still in the dark Monday afternoon after overnight rainstorms knocked tree branches and other debris into power lines. Service to more than 27,000 customers had been restored.
After Sandy in 2012, state regulators approved Consolidated Edison Inc.’s request for $1 billion in grid upgrades to protect the New York City utility system against flooding and intense storms. The improvements have averted more than 65,000 customer blackouts since Sandy struck, Con Edison has said.
Florida utilities plan to meet with regulators in March to review what happened during Matthew and what future steps may be needed, said Cynthia Muir, a spokeswoman for the Public Service Commission. Matthew was a “real test” of the state’s efforts, she said.
“Florida’s utilities are setting the model for storm-restoration plans used across the industry,” Julie Brown, chairman of the state public service commission, said in an Oct. 14 statement.