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Utilities expect massive outages, high repair costs from Florence

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Utilities expect massive outages, high repair costs from Florence

  • Author
  • Mark Watson
  • Editor
  • Rocco Canonica
  • Commodity
  • Electric Power

Houston — Storm surge threatens nuclear plants

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Damages affecting capital costs

As Hurricane Florence approached the Atlantic Seaboard and a tropical disturbance looked increasingly likely to become a cyclone threatening the US Gulf Coast, power companies shifted thousands of workers toward likely trouble areas, and industry observers pondered a future with grids fighting disasters on multiple fronts.

Duke Energy meteorologists on Wednesday said power outages from Hurricane Florence could range between 1 million and 3 million customers.

"The magnitude of the storm is beyond what we have seen in years," said Howard Fowler, Duke Energy's incident commander. "With the storm expected to linger, power restoration work could take weeks instead of days."

Duke is bringing in more than 20,000 people to restore power -- the company's largest-ever resource mobilization. More than 8,000 Carolinas-based workers are being joined by 1,700 workers from Duke Energy Midwest and 1,200 from Duke Energy Florida to respond to this storm. Another 9,400 workers are coming from other utilities to help.

Among those are about 100 people each from Entergy Arkansas and Entergy Mississippi, but Entergy Texas is keeping its crews on standby as the National Hurricane Center gives a tropical disturbance located in the central Gulf of Mexico a 70% chance of becoming a cyclone by Friday afternoon.

"Regardless of development, heavy rainfall and gusty winds are expected across portions of northeastern Mexico, Texas, and Louisiana late this week," the National Hurricane Center said.

Another utility that has not yet moved repair workers in preparation for the storm is Georgia Power, as Florence's forecast path has moved south to encompass more of that state.

Georgia Power spokeswoman Meredith Stone said, "We are holding our crews in place until Florence makes landfall and we know where they are needed."


One issue that complicates the situation may be the high concentration of nuclear power along the potential impact areas.

Duke's 1,928-MW Brunswick plant is on a coastal area near Southport, North Carolina, that could face a 20-foot storm surge, with as much as 40 inches of rainfall, and the storm surge alone could cause flooding at the plant, according to S&P Global Platts Analytics. Also, the 973-MW Shearon Harris plant is in an area southwest of Raleigh, North Carolina, that is most likely to be affected by severe flooding, but the region has 10 other nuclear plants near the coast that may be at risk.

Another plant at risk is the 1,750-MW Surry nuclear plant near Williamsburg, Virginia, according to a statement from the Union of Concerned Scientists, which also cited risks at the Brunswick plant.

Dave Lochbaum, UCS nuclear safety project director, said, "We do know that both Brunswick and Surry have had potentially serious problems that we hope they fixed."

The US Nuclear Regulatory Commission in March 2017 said the Brunswick plant's buildings were estimated as capable of handling a storm surge of up to 7 feet at the reactor buildings, while the Surry plant's greater risks are flooding from heavy rainfall that could top the plant's barriers, the UCS statement said.


Therefore, the repair costs from Hurricane Florence may be large -- some estimates have ranged from $20 billion to $30 billion for all types of damage, not just utilities. In comparison, restoration costs from Hurricane Harvey, which struck Texas and Louisiana over the Labor Day weekend in 2017, were estimated to total $125 billion.

The White House estimated Harvey's cost to the US economy at 0.6 percentage point off the annual GDP.

Matthew Cordaro, a former Midcontinent Independent System Operator CEO who now resides in New York, noted that local communities "are usually impacted over an extended period of time" after such a disaster.

"On the other hand, utilities have the potential to recover relatively quickly because they ultimately are guaranteed return of their costs from ratepayers," Cordaro said.

Platts Analytics estimated that it took 10 days for power demand to be restored to normal after Hurricane Harvey, but that the stronger Hurricane Florence may cause demand declines to persist longer than recent examples.

Carey King, University of Texas Energy Institute assistant director, said power companies' capital costs "are already increasing in an absolute sense and per customer ... more than just because of destroyed infrastructure."

For investor-owned utilities and others that report to the US Federal Energy Regulatory Commission, capital costs for all purposes have increased from less than $750/customer in the early 2000s to about $1,000 in 2017, King said.

Scott Miller, executive director of the Western Power Trading Forum, said, "It has been suggested that climate change is making this job more frequent and thus more expensive. Probably true.

"Utilities have always done well, and will continue to do well" in managing service restoration, but if disasters strike more frequently, utilities that have been getting less revenue based on energy sales have fewer resources to prepare and respond.

"However, getting regulators to recognize there is a need to 'harden' distribution systems (usually the culprit in outages) could be a cost-effective investment that regulators could allow, which would replace the lost investment 'growth' from generation," Miller said. "This is probably the future." -- Mark Watson,

-- Edited by Rocco Canonica,