Utilities must accept
the reality of climate change
BGE, Pepco have struggled with recent storms
because they consider them extraordinary
October 9, 2012
Whether or not they accept the scientific evidence that climate change is
man-made, Maryland businesses and families with electric lights know that
climate change has already had a dire economic impact on our region.
Unprecedented weather extremes have pummeled our state and power distribution
system. Crippling storms and heat in the summer and snow storms in the winter,
previously rare in Maryland, have become commonplace.
Such extreme weather events dramatically increase the risk to Maryland's
old-fashioned electric utilities, which were built and are managed for a 1950s
economy — and climate. In the past several years, increasingly frequent and
ferocious storms have repeatedly knocked out power for dangerously long
periods.
Despite claims from such utilities as Pepco and Baltimore Gas & Electric
Co. (BGE) that they have improved their storm response and helped to correct
power interruption, the truth is that hundreds of thousands of Maryland
families had to wake up, for several days or even a week, to homes without
electricity this year.
The results of utilities' failure to modernize in the face of climate change
are clear — food rotting in refrigerators, hourly workers laid off, small
businesses closed for days, and hundreds of millions of dollars in goods,
services and productivity lost by Maryland's economy.
States that take steps to ensure reliable electric service in the face of these
new weather extremes are going to reap economic advantages. More than ever,
reliable electric service is critical to the economy — from digital commerce
and cloud computing to 911 emergency services, home offices and smart phones.
This summer, we wrote to the CEOs of BGE and Pepco to warn them of the
substantial financial risk that climate change poses. We urged them to accept,
not deny, the science and to take aggressive steps to modernize — to update
their business strategy for a 21st century climate with both more frequent and
severe weather disturbances and an increased peak demand for electricity caused
by extreme temperatures. Unfortunately, their responses dodged the issue.
Instead they repeated helpful but small-bore initiatives such as tree-trimming
and smart meter programs.
The state of Maryland has officially recognized climate change and explicitly
built it into its business plans and regulatory policy. The state's electric
utilities should do the same. That means that utilities must do more to
anticipate weather extremes, not respond to observed changes that are already
affecting customers.
Clearly, Maryland utilities' traditional approach to major outages — paying
overtime for employees and relying on utilities from outside Maryland — has
failed. As an alternative, utilities should consider an electric power
"surge reserve" of trained technicians, similar to volunteer fire
departments and the National Guard. Retired utility workers, retired military,
independent electricians and other building trades would all be candidates to
take part. With more equipment on hand, this back-up team would cut the cost of
power failures dramatically by restoring service promptly.
Despite the clear need to modernize, utilities' investments in energy
technology have been scaled back. They have slashed maintenance efforts and
failed to invest in the latest technology such as automatic circuit re-closers,
which can isolate faults or automatically close circuits to restore power.
This year, following legislation we passed in 2011, the Public Service
Commission (PSC) set service and reliability standards for electric utilities.
We also gave authority to impose financial penalties of $25,000 per customer
per day on utilities that fail to meet the standards — fines that are required
to be paid by stockholders, not consumers. It's time for the PSC to use their
authority, thereby creating the right financial incentives for the utilities to
modernize.
Common sense and experience around the world show that selectively burying
wires underground is the most successful and cost-effective long-term fix. BGE
and Pepco have recently said they'd consider more undergrounding. That's a step
forward. Now, the PSC should compare such costs against the cost of power
failures as measured in lost work time and business activity, spoiled food, and
risks to public safety and health — and order the utilities to make the
cost-effective investment.
Just last week Gov. Martin O'Malley urged the PSC to adopt a new plan that
would incentivize utilities to accelerate several years of serious maintenance
upgrades so that the electric grid will be stronger and more reliable within 24
months. The governor's task force made 11 recommendations for protecting
Maryland's economy from costly power failures. Many of the suggestions,
particularly selective undergrounding of utility lines, make sense.
But the larger issue, and the one which needs to be addressed first, is the
utilities' continuing refusal to join the governor, the General Assembly, the
scientific community, and the majority of their customers in frankly and
publicly accepting that climate change is real and that their business strategy
needs to move into the 21st century. Until they correctly understand the
problem, they will continue to fail to solve it.
We know the consequences of not acting. It's past time for the utilities to
accept the science and act on it for the benefit of Maryland's economy. The PSC
must make sure that they do.
Sen. Brian Frosh (brian.frosh@senate.state.md.us) represents Montgomery County. Sen. Jim
Rosapepe (jim.rosapepe@senate.state.md.us) represents Prince George's and Anne Arundel
County. Both are Democrats.