Summary
Disruptive events have increased significantly over the last decade. Utilities and ratepayers are now beginning to experience the impact of the cost of these storms. As an example, in order to cover rising insurance premiums that have increased 1888%1 over five years due to recent wildfire events, Rocky Mountain Power is asking for a $123 million dollar rate increase. PacifiCorp is facing a $45 billion dollar liability from their 2020 Archie Creek fire in Douglas County, Oregon2, and this does not include the cost for disrupted lives and long-term health effects on impacted communities.
Regulators, utilities and communities are searching for solutions to combat this rising trend. Utilities are looking at mitigation strategies such as Public Safety Power Shutoffs (PSPS)3 to reduce claims and associated costs. Other measures include legislation that limits liabilities that utilities face and insures solvency of these valuable institutions. Regulators are looking at other mechanisms such as performance-based rates (PBR) and other policy measures to encourage innovation in combatting this rising trend.
As with most issues, solutions are complex, and the probability that one solution will fix everything is unlikely. This article will explore the idea of newer technology, non-wire alternative configurations and process changes as a three-pronged solution in this mitigation effort that will potentially also reduce costs and enhance, either combined or individually, each mitigation strategy. In most cases, they will also contribute value that can be leveraged in other use areas beyond wildfire mitigation.
Background
The size and number of wildfires in the United States has been recorded since 1983 by the National Interagency Fire Center. Over the past 20 years, the amount of land area burned each year has increased as wildfires have grown larger, while the number of fires each year has remained fairly constant4. This is due to the combination of climate change and land management practices. Climate change is extending seasons and drying out vegetation which increases the amount of fire fuel. Expanded development in more remote areas means additional miles of poles and wires that utilities have to serve, which also increases the probability and size of events.
Opportunities
Utilities, regulators and states have several strategies in place to tackle the issues of reducing steep rate increases and limiting physical damages to ratepayers. The top strategies utilities are investigating are as follows:
PSPS is a newer trend and specifically adopted by Western utilities. It is the process of monitoring weather events, specifically low humidity and high wind conditions. Utilities put a series of procedural steps into action, starting with communications to customers prior to an expected event. During the event, utilities take proactive steps to shut off power to circuits that might be impacted and after the event, impacted areas are inspected prior to fully restoring power to those circuits. Meanwhile, communications to customers continues throughout each step of the process. This is a newer strategy and provides opportunities to improve procedures and reduce impacts on customers.
Technology can contribute and be a powerful tool in maturing this PSPS process. Technology such as Advance Metering Infrastructure (AMI), grid intelligence, software platforms such Distributed Energy Resource Management Solution (DERMS) and Advance Distributed Management Solutions (ADMS), and Battery Energy Storage Solutions (BESS) configurations can improve the efficacy of this effort. Via automation, the Non-Wire Alternatives (NWAs), combined and overlayed with the existing PSPS process, can significantly improve and facilitate proactive identification, communication and restoration efforts. In addition, they can improve the situations of the most vulnerable or underserved areas by leveraging localized intelligence to isolate, monitor and evaluate response and recovery efforts in these specific locations.
Legislation is another strategy utilities are pushing to limit their liabilities with these events. Congress is actively debating how to balance accountability and viability of these critical local institutions. This will help create a larger funding pool to spread the risk and incentivize insurers to continue providing coverage to utilities at a reasonable cost. Keeping costs under control will be a critical aspect of any plan. The above technology for PSPS can also be leveraged in monitoring and evaluation and pinpoint higher risk profiles of locational areas in a utilities service territory. Utilities can then develop mitigation measures such as vegetation control or possibly putting in underground lines in these targeted areas. Establishing a transparent metric and reporting are equally critical. These are evolving as evidenced with PG&E and reporting “wires down” and “ignition” events that include reporting the event, who responded, and action taken to the California Public Utility Commission (CPUC). These are positive steps in accountability.
Performance Based Rates (PBR) is the third leg in the stool to support the adoption of innovative tools and processes to mitigate the damage wildfires can cause. PBR is a tool and mechanism for a utility to make a strong argument to regulators on the value of these investments to ratepayers and the value of sharing the risk on innovative approaches and technologies. Specifically establishing reasonable and easy to understand benchmarks around inflation and the bills ratepayers pay should be rewarded. Metrics centered around affordable, clean and resilient energy can also be a measure to compare the efficacy of the programs in quality of response and recovery efforts. This provides an effective tool for policy makers and utilities to mature best practices to mitigate the damage wildfires cause.
All three strategies augmented with innovative technology and process changes are required to realize the outcome of reducing wildfire claims and associated liabilities. In addition, they can encourage cohesive behaviors to adopt, mature and build industry best practices when there is a method to locate where events occur and organize appropriate localized responses. This section focused on considering new NWA technology and other options such as moving lines underground, micro grids, and vegetation management practices in the overall analysis. Complex issues such as these require programmatic efforts to yield positive and constructive results to all stakeholders.
Challenges
In order to seize the technology opportunities, the challenges must also be taken into account. Challenges that persist when considering technology as a solution are as follows:
- Land management and development practices
- Cost
- Equitable service
These challenges, if not addressed, will continue to increase the probability as well as introduce more complexities to mitigating the wildfire outcome in an equitable manner.
Land Management
Along with climate change, land development adds to these problems. Developers continue to push into more rural areas, which frequently include more vegetation and fuel. In addition, utilities designing their assets to service them require more miles of poles and wires. When working with local governments and developers on how to address these challenges, the additional costs and risk of insurability in these areas should be considered. Some technology configurations, such as micro grids combined with AMI and grid edge intelligence technologies, may mitigate some of these challenges.
Costs
As in any endeavor, cost plays a critical role. Many of the alternatives may have expensive solutions either in real dollars or disruption in time. Every situation is going to be unique and must be evaluated holistically. When addressing possible solutions, a good benefit and cost analysis needs to be obtained, and a comparison made for the best option to reduce wildfire risk. Additionally, understanding who is impacted and consideration of the complexity of the configurations and maturity must be key components of the analysis as well.
Equitable Service
The complexities of addressing the most vulnerable and underserved need to be considered in the overall analysis. Many of the processes include vulnerable populations who rely on the energy to survive or underserve portion of the communities might be underrepresented in the analysis. Simplifying this in any of the process becomes challenging and burdensome. Localized NWA technology can help improve service and mitigation and reduce the complexity in a streamline process. This creates more options to evolve best practices, test them in simulation and reduce costs prior to deploying in the field.
Call To Action
The option of doing nothing is really not an option. There is a significant cost to doing nothing and also aggressively targeting ways to execute on the strategy. Some suggested steps to address this are as follows:
- Find seasoned experienced professionals for solution architecture development
- Plan, plan, plan
- Act fast on the plan
- Measure, evaluate and adapt
These pillars are proven standards in dealing with complex issues and managing the cost of the possible solutions. Looking for the right combination of proven idea mixed with innovation will be instrumental in building best practices for the industry.
Conclusion
Wildfire and its impacts will continue to grow in size and intensity. Developing effective strategies and tactics are instrumental in this history of utility mission of delivering affordable, clean and resilient energy and water. Leveraging technologies is a powerful weapon in the arsenal to innovate and mitigate these threats.
Combining with seasoned professionals who understand these complexities and the tools needed to proceed increases the probability of success. This will be an on-going fight for us all to focus on sooner rather than later.
Glossary
- BTM – Behind the Meter
- NWA – Non-Wire Alternatives
- PBRs – Performance Based Rates
- PSPS – Public Safety Power Shutoffs
- Greybull Standard August 2024 https://greybullstandard.com/content/utility-requests-rate-increase-offset-fire-costs ↩︎
- Stateline: As wildfires intensify, utilities want liability protections. But then who pays? Power companies say they face bankruptcy or rate hikes due to growing risk. ↩︎
- American Public Power Association Business Case Guide December 2024 ↩︎
- Environmental Protection Agency https://www.epa.gov/climate-indicators/climate-change-indicators-wildfires#tab-2 ↩︎
- [1] Washington State Standard: PacifiCorp involved in bills to limit utility wildfire liability and damages Legislation is expected to advance in Oregon this week. A Washington bill is also pending. ↩︎