After Irene, Utilities Race to Restore Power

 | Sep 02, 2011 | 1:30 PM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

cv

,

ed

,

d

,

pom

,

ceg

,

exc

,

nu

,

ngg

,

nst

Last week, millions of consumers lost electric power after Hurricane Irene bowled over tress and power lines. Several days later, tens of thousands of households remain without power. Why does it take so long for utilities to restore power? It seems simple enough -- just reconnect the wires and move along.
It's not so simple. To reconstruct power systems after they have been assaulted by severe weather requires a careful thought and planning. The strategy is to seek the greatest good for the greatest number of people. That means fixing the larger systems first and restoring power to critical loads such as hospitals and public safety facilities as quickly as possible.

First on the list is to fix any damaged transmission lines. Transmission lines are the lifeblood of the utility system; they are the local utility's primary source of electric power for distribution to consumers. When transmission lines go out of commission, little power will reach consumers.

Transmission lines dump power into substations, where transmission-level voltages are lowered for local consumption. Sub-transmission lines feed critical, large loads and distribution substations. So the next priority is to make sure substations are in operating condition.

Without substations operating, no power will reach consumers. This is a lesson Central Vermont Public Service (CV) customers learned as many of Central Vermont's substations were wiped out by flash floods.

It is not always easy to fix damaged substations. Replacement equipment is often large, heavy and stored at remote locations. It can take days to replace and install large equipment. But once a substation is repaired, many customers suddenly find power restored.

With a source of power assured, the local distribution companies can concentrate on restoring the lower voltages. Generally, higher voltages have restoration priority over lower voltage loads. If there are power poles with three or four wires tied to big insulators, customers on those circuits will likely see service restored before homes served by a pair of thin wires. These same higher-voltage customers tend to lose power less often (keep this in mind when you buy your next house).

Also, the lower voltage systems frequently negotiate air space with trees and vegetation. Falling branches and trees frequently snag low-voltage power lines and keep power from local neighborhoods.

Water and electricity do not play well together. Underground distribution systems must be free of water before any power can be restored. So if there is a stream of water running over underground power lines, that part of the system cannot be restored until all the water is cleared.

In the Case of Irene

With that as background, last week, Hurricane Irene caused about 7 million customers to lose power, and each "customer" represents two or three individuals. Different communities had different challenges: Some had problems with substations, others only had challenges with the lower-voltage distribution systems.

While some utilities may have fared better, it could take weeks before their systems are fully restored. One complicating factor is the trees. When roots lose hold in soggy ground, trees continue to fall on distribution lines.

Consolidated Edison (ED) said "nearly all" of its New York City and Westchester County customers have been restored. For the rest of the state, the news was not as good. Long Island Power Authority expects to work all weekend to restore power.

Further south, Dominion Resources (D) has a vast distribution system coving large portions of the Commonwealth of Virginia and a smaller part of North Carolina. After a week, Dominion still has thousands of customers without power. The company says that it plans to have 95% of the outage contained by the close of business on Friday.

Pepco Holdings (POM) fared better. Battling a horrible reputation for customer service, Pepco has fewer than 220 customers without power as of Friday morning.

Baltimore Gas & Electric, the regulated subsidiary of Constellation Energy Group (CEG), fared worse. According to the Baltimore Sun, "By Thursday evening, roughly 59,000 BGE customers remained in the dark." These poor results may affect Constellation's proposed merger with Chicago-based Exelon (EXC); the state may impose more conditions before approving the merger.

It will take until next week to restore power in Connecticut. According to NBC Connecticut, the number of people without power is down to about 170,000 on Friday morning. Connecticut Light & Power, a subsidiary of Northeast Utilities (NU), said power should be fully restored by next Wednesday.

According to the Boston Globe, Massachusetts has about 32,000 customers without power. Irene knocked out over 425 poles owned by National Grid (NGG) and NStar (NST). 

While many people may believe Irene was overhyped, from a utility perspective it was not. Just ask the millions of customers who have been groping in the dark without air conditioning, refrigeration, lights or Internet.

Columnist Conversations

Fitness center operator LifeTime Fitness (LTM) got whacked this morning on less than expected Q2 numbers. It's...
Netflix Inc (NFLX) Sent on July 22 "That brings us to today, and if you are short I would stay the course. Wit...
It isn't just Coach (COH) higher on the retail side by around 1.5%+ this morning. There are lots of names like...
A raft of good earnings cannot push the VIX down today. What ever is driving volatility lately it is not comi...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.