An Evolving Energy Risk Landscape
As manmade and natural risks evolve, critical infrastructure such as utilities face a growingly complex threat landscape. Nationwide, wildfires are increasing in frequency, destructiveness, and cost, with the western United States (US) facing some of the most severe activity. Recent disasters related to utilities have underscored the complex challenges companies face in managing such risks, as well as the urgent need for strategic planning and partnerships.
To better understand these challenges, Hagerty sat down with our client Salt River Project (SRP). SRP is a community-based, not-for-profit public utility company providing electricity and water services across central Arizona. In our conversation, they share insights on their evolving risk profile, ongoing mitigation efforts, and adaptive strategies amid shifting federal and public policies. We also discuss how some organizations are turning to Public Safety Power Shutoffs (PSPS) as a wildfire mitigation strategy. PSPS proactively de-energizes power lines ahead of imminent high-risk conditions such as strong winds and extreme heat events.
A Utility’s Perspective
Read about SRP’s perspective on the dynamic threat landscape and their wildfire risk mitigation approach as they prepare for the future.
Utilities across the country are grappling with unprecedented natural hazards. Can you discuss the changing risk profile at SRP?
SRP: It is no secret that Arizona faces extreme heat. Although SRP has a long history of successfully managing heat-related hazards to our system, we are seeing shifts in the ever-changing risk landscape. For example, as our customer base expands into more rural parts of our service territory, forest health and vegetation management have become increasingly more important. Also, increases in average overnight temperatures are reducing the time available for system cooling. This can result in the general degradation of assets, reduced system capacity and community health concerns. Finally, Arizona has been in a drought since 1994. Thirty-plus years of dry weather coupled with extreme heat can have drastic impacts on the environment.
What are some steps SRP is taking to manage the unprecedented risk faced by natural hazards, specifically in terms of wildfire response planning and mitigation?
SRP: Three years ago, a team within SRP began developing a wildfire mitigation plan. This is an active and ongoing initiative, being constantly reviewed and developed as the team continues to learn and gather more data. Our mitigation tactics include vegetation and asset management, system hardening (e.g., non-expulsion fuses, pole wrapping), and monitoring (e.g., SmokeD monitors). Additionally, the team plans to add more weather stations to enhance forecasting and monitoring capabilities.
Another mitigation tactic we are taking is modeling fire-risk propensity. This is being done through collaboration with a vendor who mapped the system and integrated weather, moisture, vegetation data, and more to understand the risk profile and potential impacts. This effort will allow us to effectively plan and better prepare for the future. Though, even with all these steps, there may still come a time when conditions are ripe for wildfires, and we may need to activate the PSPS plan. However, through strategic mitigation efforts, we seek to proactively reduce risk and ultimately avoid initiating a PSPS event. Additionally, SRP is working with Hagerty to posture our emergency response so we can address incidents efficiently and effectively as they occur.
What are the biggest obstacles SRP is facing in trying to manage these new risks?
SRP: At the end of the day, we aim to have a system that is safe, reliable, and resilient no matter the climate conditions. At the same time, we need to ensure the system can produce and deliver affordable energy to our customers. Effectively balancing these components can be challenging and requires a pragmatic investment strategy. Also, there is a butterfly effect to consider as our system rapidly expands. Many large customers are coming online, and inverter-based resource (IBR) devices and variable generation are all adding complexity to the system. When a very hot day adds strain to the grid, the key is identifying and accounting for the interplays. Fortunately, SRP has talented planning and operational teams continually working to address this and understand how those variables impact each other.
With many federal policies and funding opportunities beginning to shift, how are you preparing to adjust to changes as they come to fruition?
SRP: It is a dynamic environment, so we must be extremely proactive and flexible. Although SRP has a much smaller fire risk than its sister utility, we still have a PSPS program and numerous mitigation strategies in place. Amid the current federal funding landscape, we encourage our people to pursue funding opportunities and proactively incorporate relevant items into the budget. In addition to being proactive, there is a lot of ongoing collaboration both internally and externally. The federal affairs staff in our Washington DC office and the state and local affairs team here in Phoenix work diligently to stay ahead of any policy changes.
External partnerships are also integral to adjusting to the evolving landscape. As such, SRP stays connected with peer utilities in Arizona and actively participates in several industry working groups. These groups collaborate on topics related to risk management, climate, and fire mitigation. We also maintain open lines of communications with local, county, and state agencies to share relevant information and needs. Additionally, SRP has excellent working relationships with the US Forest Service (USFS) and Bureau of Land Management (BLM), partnering to reduce fire fuel. We also value fostering meaningful relationships with first responders.
Hagerty Can Help
The evolving risk landscape for utilities like SRP creates complex challenges and an urgent need for mitigation. Through proactive blue-sky collaboration with peer utilities and PSPS planning, organizations can reduce vulnerabilities and fortify against wildfire threats. Amid these evolutions, utility companies can ensure they are making strategic investments that decrease risks by pursuing both efficiency and effectiveness. As SRP continues to invest in emergency preparedness, Hagerty leverages our team’s extensive experience to conduct program assessments and exercise series in support of their efforts.
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 here.