Rarely has the health of the North American power grid been such a focal point of the United States (US) political conversation. What was once accepted as wholly reliable has now faced unprecedented stresses, both manmade and natural. The challenges utilities face are worsening for many reasons – not least climate change – leaving governments, investors, and utilities to grapple with how to assist in response to emergencies, regulate risk, and invest in infrastructure with limited resources.
Catastrophic events like the 2023 Maui County wildfires underscore the complex challenges governments and utilities face in preparing for, mitigating, and managing such risks. Strengthening partnerships between these entities is essential for a comprehensive and adaptive response to the rapidly evolving risk landscape.
The Evolving Utility Risk Landscape
The US is experiencing increasing power demands not seen in decades, driven by the growing demand for emerging technologies such as electric vehicles (EV) and artificial intelligence (AI). Considering that the US grid relies on aging and often outdated infrastructure, this growing demand is a significant challenge to tackle, even in a static risk environment. Unfortunately, the risk environment facing utilities is not static.
Climate change is exacerbating these issues exponentially, adding strain to an already stressed system. Heatwaves are getting hotter, droughts are lasting longer, and tropical cyclones are becoming more intense. These events are not only increasing in severity, but also in frequency. For example, in the Atlantic Ocean has doubled since 1980. Already, the risks that these emerging circumstances pose to utilities are taking their toll. In California, a confluence of equipment failure and dry vegetation from drought caused devastating wildfires. Meanwhile in Texas, an extreme winter storm caused widespread blackouts leaving millions without power. Utilities are being expected to adapt to this new risk environment, while also overhauling aging infrastructure and meeting demand growth.
Mind the Gap: Governmental and Utility Partnerships
As utilities rush to adapt to their rapidly changing environment, governments also find themselves racing to ensure regulation keeps pace with the change. A handful of states already have robust regulation spanning emergency preparedness and wildfire mitigation, such as California. However, these states’ regulatory frameworks have often been borne from necessity, with catastrophes forcing regulatory change. While regulation is important, there is a balance to be struck. Warren Buffet’s 2023 shareholder letter suggested that “the regulatory climate in a few states has raised the specter of zero profitability or even bankruptcy.” This signals that there is still a way to go in reconciling the needs of regulators and utilities as the natural environment changes.
In the immediate term, there are actions utilities, regulators, and emergency managers can take to strengthen their preparedness and response capabilities. The Hagerty team sees community partnership and public communications as recurring challenges for government and utilities alike, be it in the context of hurricanes, ice storms, or wildfires. Building a shared understanding of the priorities and needs following an event is crucial but can begin with small and tangible steps. For example, ensuring a utility’s restoration prioritization is aligned with a local or county emergency management office will minimize the risk of surprise for both parties, while also reducing the number of decisions that need to be made during a crisis. Likewise, aligning communications between utilities and emergency managers can help ensure the public know what to expect when an outage occurs. At its most basic, this collaboration can begin with a workshop and some sticky notes. The key is to act before an event occurs.
The Hawai’i Wildfires: A Case Study
One of the most recent and devastating examples of what can happen when utilities grapple with these changing risk factors is the devastating fires in Maui County.
Preceding the incident, Maui had been experiencing drought ranging from abnormal to severe across its regions. Additionally, Hawai’i has been plagued with highly invasive grasses. The combination of drought conditions and invasive species provided the perfect fuel for a wildfire. Ignition is suspected to have been caused in part by power lines contacting vegetation, whether due to mechanical failure or conductor swing during high winds is still unclear. These high winds caused by Hurricane Dora passing south of the island not only contributed to the suspected power failure but caused the fire to spread rapidly across the island.
Following the wildfires, questions arose regarding the sequence of events. The utility company acknowledged that its power lines contributed to the fire’s ignition but suggested that firefighters may have left the initial fire site too soon, allowing a new fire to start nearby. Meanwhile, county officials felt the utility should have proactively cut power to high-risk areas as a preventive measure.
While pre-planning cannot account for every scenario, strengthening partnerships ahead of an event can help streamline response efforts. For example, local governments and utilities meeting under blue sky conditions to understand their first responder protocol and establish relationships. Similarly, utilities can develop a Public Safety Power Shut off (PSPS) program with the community to balance potential cost and impact to their constituents.
Conclusion
The evolving risk landscape for utility providers is a complex interplay of climate, demand, and the need to invest in our infrastructure. These challenges are compounded by the need for utilities and governments to collaborate with both new regulations and operational practices.
The Maui wildfires demonstrate the risks this unique environment presents. They also offer an opportunity for learning for state, local, tribal, and territorial (SLTT) governments and utilities across the country. For emergency managers, this means developing a deeper understanding of grid operations and utility emergency response to ensure they can enable utility partners. For utilities, proactive blue-sky collaboration with government partners will be crucial in reducing the number of decisions that need to be made during an event, and ensuring power is restored safely and efficiently. With every year seeing more extreme events, the cost of not partnering and preparing is too high to pay.
Hagerty Can Help
Hagerty has helped utilities across the country develop their emergency management program and facilitate communication and partnerships with their communities. For more information on how Hagerty Consulting can support your community’s energy utility preparedness efforts or to learn more about our work, please contact us at [email protected].
Jonathan Davis is Hagerty’s Energy Sector Lead and a Senior Managing Associate within the Preparedness Division, helping clients navigate and address complex topics in energy resilience, climate adaptation, and public policy. Prior to joining Hagerty, Jonathan worked for the United Kingdom (UK) Home Office – the UK’s lead government department for counterterrorism and policing, immigration, and crime.
Fallon McKain is a Senior Managing Associate within Hagerty’s Preparedness Division. With over eight years of experience in the power industry as a transmission line engineer, Fallon has led billion-dollar infrastructure projects as both a technical expert and a team leader. Prior to Hagerty, she spent five years at Florida Power and Light (FPL) designing and managing transmission projects, both large and small. Fallon also supported storm restoration efforts during Hurricane Irma and Michael.