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Hurricane Sandy left the energy infrastructures of the Mid-Atlantic states in shambles. In New York and New Jersey, millions of people lost heat and power, despite the fact that utilities, such as New York's Con Edison, took preventive measures to limit their grid's vulnerability.

Plainly put, the fundamental underpinnings of our energy infrastructure are outdated and under-engineered. Although our grid is mostly reliable under normal conditions, Sandy represents an opportunity for utility planners and their customers to consider the costs they are willing to pay for an even more resilient grid.

Although the last five years have seen robust and widespread smart grid development, little progress has been made in actually enhancing grid resiliency. Case in point, thousands of people affected by Sandy are still without power two weeks after the storm dissipated. Unless regulators begin taking the need for preventive system upgrades seriously, there seems little question that severe weather events will continue to trigger long-term disruptions to our electrical infrastructure.

Of course, protecting our grids from failure is an extremely costly endeavor. Hardening transmission and distribution lines, or moving them underground, is cost prohibitive for most utilities and would likely require rate case increases that would shock customers. For example, Con Edison, whose electrical system powering New York City is perhaps the most complicated and under demand in the world, has previously assessed and dismissed moving key system components underground due to costs. Con Edison’s 2006 estimate for a full line burial of its system was $22 billion dollars, or roughly $1 million per mile.

Now, in the aftermath of Sandy, Con Edison, as well as other utilities in the region, is once again openly reconsidering major system redesigns. This will add to an already complicated dynamic between the Public Utility Commissions of New York and New Jersey, utilities, service operators, and state governments in finding a way to realistically fund the need for additional resiliency. The difficulty in finding ways to finance widespread grid upgrades, however, is a nationwide problem. After all, one of the primary reasons our nation’s electrical infrastructure changes slowly is that upgrades to the system are often prohibited from being performed preemptively. Under the current system of rate-case-based funding, utility planners are often not incentivized or encouraged to invest in system upgrades until after a failure has occurred. Now more than ever, regulators must work with utilities to ensure that intelligent grid planning takes place.

Fortunately, some of this groundwork has already been laid. Many utilities are deploying advanced technologies and best practices. The assimilation of the smart grid’s build-out in rate cases around the country will be a boon to planners as modernization efforts begin to expand. Self-healing technologies and advanced metering are providing utilities with the ability to react and respond to system disruptions rapidly. Moreover, state and federal policies geared toward achieving efficiency gains are providing a step in the right direction by spurring builders and appliance manufacturers to tap into the growing consumer demand for energy efficiency and smart technologies. More strategic policies are achievable, and by working with the private marketplace, the demand for energy- efficient goods, services and demand-side technologies will expand rapidly. This will make our homes, appliances, offices and grid smarter.

Another source of optimism is the growing number of distributed generation (DG) pockets throughout the nation. An expansion of DG will continue to alleviate strains on the grid, and it helps further bolster resiliency by lessening the need for vulnerable transmission and distribution equipment upgrades and expansions. Proven combined heat and power technologies are finally gaining widespread recognition by system planners and environmental regulators, and they make great economic sense because of the abundance of cheap natural gas. Even more nuanced technologies, such as  microturbines, are beginning to garnish more attention, as technology advances from industrial leaders such as General Electric, Honda and Toyota are helping to create cost-competitive systems for residential and small commercial applications. Additional developments in fuel cells, distributed renewable power and energy storage are also encouraging.

Overall, it is vital that we maintain a holistic view of the options available to us in modernizing the grid. We are facing a difficult challenge, but one that must be undertaken. After all, there is no doubt that future severe weather events and the possibility of national security threats will continue to pose risks to the resiliency of the grid.


John P. Cahill is counsel to international law firm Chadbourne & Parke LLP and is former commissioner of the New York State Department of Environmental Conservation and former chief of staff to New York State Gov. George E. Pataki. Cahill can be contacted at (212) 408-5177 or jcahill@chadbourne.com.




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