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Analysis: Utilities spending about $520 million to repair systems after Hurricane Harvey

Singapore — In the year since Hurricane Harvey devastated the western Gulf Coast with high-speed winds and record rain totals, electric utilities have spent about $520 million to repair damage and harden systems in preparation for the next major storm, and that work continues.

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The Category 4 storm made landfall at San Jose Island, Texas, on August 25, 2017, weakened to a Category 3 storm and made another landfall at Holiday Beach, Texas, later that day. It then weakened to a tropical storm and hovered over and near East Texas and Louisiana, eventually dissipating on September 3.

The National Oceanic and Atmospheric Administration estimated total damage around $125 billion, similar to 2005's Hurricane Katrina.

The area the storm hit first was mainly served by American Electric Power's Texas transmission and distribution subsidiary, where the number of outages peaked at about 220,000 customers, AEP Texas spokesman Larry Jones said in an email Monday.

"By September 9, crews had restored service to over 96% of customers left without power as a result of the storm," Jones said, adding that the state of home and business damage delayed power restoration for much of the remainder.

Earlier this month, AEP Texas asked the Public Utility Commission of Texas to determine that about $379 million in transmission-and-distribution related costs associated with Harvey "were reasonable and necessary and eligible for recovery," Jones said. AEP Texas also sought a similar determination for an additional $36 million in costs associated with earlier weather events.

TRANSMISSION ON COAST

By early this September, AEP Texas will have completed and energized the reconstruction of a transmission line from Port Aransas to Aransas Pass, Texas, Jones said Tuesday.

"This will mark completion of the last of significant remaining repairs associated with Hurricane Harvey," Jones said.

Asked whether AEP Texas has been making improvements to harden its grid or enhance its reliability, Jones said, "Even prior to Hurricane Harvey, AEP Texas already had plans to invest approximately $1 billion a year for transmission and distribution improvements to its system over the next few years."

AEP Texas' damage was primarily wind related, but the damage in Entergy's Texas and Louisiana service areas were more related to flooding that affected 17 substations, causing significant damage to six of them.

Within 14 days of the storm hitting Entergy's service area, it had restored 324,300 outages, a recent news release states. Repairing the damage, which cost the company about $70 million, has been completed, spokeswoman Kacee Kirschvink said in an email Monday.

Additionally, Sallie Rainer, Entergy Texas president and CEO, said the company was "hard at work on strengthening our infrastructure for future storms," which includes elevating substation control houses and other critical substation equipment above historic flood elevations at Vidor, Rose City, Bevil Oaks, Beaumont and Silsbee, Texas.

Entergy is evaluating more substations for measures to protect against flooding, the news release states, and it has taken other steps, including joining an industry group to share equipment such as transformers and mobile substations, participating in regulatory workshops on hurricane restoration best practices, ordering an additional mobile substation and enhancing its data analytics capability.

SUBSTATION IN HOUSTON

In earnings reports, CenterPoint Energy, the main utility that serves the Houston area, lists $64 million in restoration costs related to Hurricane Harvey, which had shut off power for more than 850,000 customers during the storm.

Not all of those repairs have been completed, CenterPoint Energy spokeswoman Alicia Dixon said Tuesday.

"[The] only outstanding damage yet to be permanently repaired is our Memorial [Drive area] Substation which was impacted by several feet of water -- repairs to this substation are near completion," Dixon said in an email, adding that CenterPoint "built a mobile substation on adjacent private property in seven days which provided service to more than 9,000 customers without power."

Asked how CenterPoint Energy has worked to harden its grid in preparation for the next storm, Dixon declined to provide specifics, but said the company "continues to make improvements to our systems and processes based on lessons learned from storms that impact our service territory, including Hurricane Harvey."

Another utility that serves the East Texas area is Texas-New Mexico Power, which had about half of its customers lose power due to problems with the distribution system, but all repairs had been done by mid-September 2017, at a cost of about $6.6 million, spokesman Eric Paul said.

The utility has made no special effort to harden its system in response to Harvey, as it had already accomplished much of the potential protective action after 2008's Hurricane Ike devastated the area, causing an estimated $30 billion in damage, according to the NOAA.

-- Mark Watson, markham.watson@spglobal.com

-- Edited by Christopher Newkumet, chris.newkumet@spglobal.com