Total Cost of a Power Outage Remains Unknown
A new report from researchers at the University of Texas at Austin and Lawrence Berkeley National Laboratory, funded by the DOE’s Office of Electricity, indicates that calculations to determine the total cost of a power outage fall short. In fact, according to the report, the total cost of any given event remains unknown years afterward – in other words, the true costs are not being measured.
What Goes into Calculating the Total Cost of a Power Outage?
There are two primary elements to this type of cost calculation – the cost to repair damage to the grid, and the indirect cost incurred by the utility’s residential and commercial customers. The first category of costs is relatively well-understood, but the second category is much more difficult to quantify.
The reason this second category is so much more difficult to quantify is that these costs are extremely diverse. For instance, residential customers can experience food spoilage, job downtime, the need to temporarily stay in a hotel, etc. There may even be fatalities involved. And businesses may lose revenue due to an interruption in operations. In many cases, especially at the residential level, these end-user costs are simply not being measured.
The reason for this discrepancy is fairly obvious when you think about it. Electric utilities must accurately measure damage and recovery costs in order to recapture these costs via rate cases. This type of cost data is required to justify the rate increase. However, there is no incentive for utilities to consider human and business interruption costs as part of this process because they have no bearing on the outcome.
This is why the total cost of a power outage is never calculated. The research paper suggests that this results in an underestimation of the amount of investment needed to enhance or even maintain the reliability of the grid. This, coming from an emergency preparedness perspective, is less-than palatable, but unfortunately, there are no signs that change is on the horizon.
