This story was originally published on August 27, 2020.
As the power outages from Tropical Storm Isaias piled up in every single community in Connecticut on Aug. 4, the finger pointing began. The utilities were seen as unprepared, leading critics to suggest they should pay for everything from snapped poles to spoiled food.
But even if Eversource and United Illuminating had stationed armies of repair crews ready to roll as soon as it was safe, the high likelihood is that all that power would still have gone out. Arguably the questions Isaias begs are not who to blame and how to punish them, energy experts say, but “How do we keep the lights on?”
The answers may require a good bit of soul searching, not just by the utility villains of the moment, but by state officials, lawmakers, advocates, and residents themselves, who for years have focused on short-term costs and electric rates instead of long-term solutions that could eventually lower those rates and provide more storm resilience.
The result is that nearly a decade after Tropical Storm Irene first demonstrated the vulnerability of Connecticut’s electricity delivery system – a scenario that has played out to different degrees many times since – the state’s first line of defense is often old-school tree trimming.
The sophisticated high-tech hardware and modern principles behind up-to-date grid resilience – on the rare occasions they’re considered at all – have largely been rejected because they cost too much up front.
Utilities do what they’re allowed to do. If you want to do things differently – then you have to change the regulatory environment.”
But talk to experts and you’ll hear a lot of ideas for technical upgrades and systemic restructuring of the grid, including how to change the regulatory paradigm so utilities do their jobs using more modern methods. Doing that, however, requires a deep dive into the arcane and complicated world of energy and its regulation; political will to address the problem, which has been in short supply; and, of course, money.
It would also likely require an across-the-board recognition that not everything associated with running an electricity system is about rates.
“It’s not just poles and wires. It’s lost business. Without air conditioning, it’s people’s lives,” said Lisa Frantzis, who knows the stakes of long-term power outages. As senior managing director of Advanced Energy Economy – an industry association dedicated to modern energy solutions – Frantzis spearheads efforts on business models and regulatory reforms for a 21st century electric grid.
But Tropical Storm Isaias delivered her a dose of reality, too.
Her family has owned Quassy Amusement Park in Middlebury for more than a century, and after Isais it sat without power for five days. That was a major hit for them that included lost food and other collateral damage and it came on top of COVID, which forced Quassy to close for months. After finally reopening, it was only at 25% capacity.
As a member of Quassy’s board, Frantzis is starting to look at ways to make the park more resilient, but as an expert she is one of many saying a wholesale change in utility business models is needed.
Putting the same old grid back up again no longer works, she said.
“That’s definitely the question of the hour,” said the Marissa Gillett, chair of the Public Utilities Regulatory Authority, PURA, since April 2019. “I definitely don’t mean to second-guess what the regulators did after the 2011 storm because I wasn’t here and they had a different set of facts available to them.”
Yes, trees were trimmed. But what utilities were told to prioritize and were paid for did not change after 2011. So here we are – again.
“Utilities do what they’re allowed to do. If you want to do things differently – then you have to change the regulatory environment,” said Daniel Bresette, executive director of the Environmental and Energy Study Institute.
That means providing the right incentives, creating avenues to make longer term investments, and thinking about customer service differently.
“It’s not something a utility can necessarily decide to do on its own,” he said. “Regulators have to catch up. The utilities probably have to take a pretty long hard look in the mirror and say ‘OK, how can we do this better; how can we be better prepared?’ There’s a role for climate and clean energy advocates, legislators.”
There’s also a ton of confusion – so a little lesson is in order.
Utilities/EDCs 101
For starters, even calling Eversource and UI “utilities” is outdated. They are electric distribution companies, or EDCs, and that’s what the body that regulates them – PURA – calls them.
It’s been a couple of decades since the companies were allowed to own power generation – the plants that make electricity. In recent years, however, both were allowed to own a small amount of clean generation, which UI has done. Eversource has not, though both have partnered with offshore wind companies, making that line a bit blurry.
It may look like you’re paying them for the power, but you’re not. It’s a pass-through charge and neither company makes money on it.
What they make money on is getting the power to you: actually transmitting it from the power plant and distributing it to your home or office. And that includes the wires, the poles, the switches, and all kinds of hardware and equipment for maintenance and repair.
The companies are “regulated” on all of these items; they go to PURA twice a year to set rates for Jan. 1 and July 1 so they can get reimbursed. It was that July 1 rate, with a hefty increase coming in the midst of the pandemic-induced economic meltdown, that caused the initial anger at the utilities before Isaias hit. That anger only intensified when the power went out.
This “cost of business” model has been around since the mid 20th century, supporting a grid model that’s been around since Thomas Edison invented it in the late 19th century. In Connecticut, how the utilities operate has history going back to 1881.
While there is a certain amount of leeway, PURA doesn’t make the rules that govern the utilities. It makes sure the utilities, or EDCs, follow the rules. Those rules largely are made by the legislature.
Given their complexity, the limited time available to part-time legislators, and the heavy lobbying endured by members of the Energy and Technology Committee, details of energy policy are often not well understood by lawmakers.
As a result, Connecticut’s legislature has focused on electric rates rather than tackling system reforms that would have required upfront capital but, in the long run, would have produced more a reliable delivery of power, as well as savings.
Recent changes in committee leadership have contributed to a void in expertise.
Sen. Norman Needleman, D-Essex, just finishing his first term in the legislature, was thrust into the co-chair position immediately. He readily admits: “I’m not an energy expert after a year chairing the energy committee.”
House co-chair, David Arconti, D-Danbury, is also in his first term chairing the committee. He did not return repeated calls.
To summarize: the rules that remain in place for the utilities largely support an old business model that has come under fire since Irene in 2011, with very little change to show for all the complaining.
But a series of proposals aimed at modernizing the grid – or grid mod by its shorthand name – that were introduced in 2017, have picked up speed in the last year. And Gillett has shown she is willing to force the utilities, if need be, to make the kinds of changes she feels grid mod requires.
The silver lining in the Isaias meltdown is that it may have provided – well – energy.
“I’ve been reflecting on this and hoping that it could be an inflection point, or a moment, or however you want to characterize it, so that we can get more eyes on the modernization piece,” Gillett said.
Katie Dykes, who began grid mod when she was chair of PURA before becoming commissioner of the Department of Energy and Environmental Protection under Gov. Ned Lamont, said there are many components that need to be aligned if the goal is modernizing the grid.
“There’s a lot of different solutions here,” she said. “What we need to do is define what the objectives are. And then put the onus on the utilities to find the most efficient way.”
Beyond just flat-out punishing Eversource and UI, the concept that seems to have bubbled up is replacing a cost-of-business model that rewards capital investment – you put up a new pole and we’ll pay you back – with a performance-based model. It would set all kinds of metrics the utilities would have to meet in order to get paid – everything from energy efficiency to environmental goals to storm resilience and reliability.
Cost of business versus performance
A performance-based model, by its nature, would better embrace future investments in changing technologies and conditions on the ground such as those precipitated by climate change. Experts note the many possibilities offer tremendous economic development opportunities.
You start with a cost-benefit analysis focusing on what tools a regulator needs to evaluate utilities’ proposals, said Janet Gail Besser, managing director at Smart Electric Power Alliance (SEPA), a nonprofit focused on carbon-free energy systems. Besser knows the Connecticut situation well, having followed it for years in her previous position with the Northeast Clean Energy Council.
“It’s important to understand utilities respond to incentives within the regulatory framework,” she said. “You also want to have a regulatory framework that’s going to support innovation and experimentation. Utilities need to be given an ‘it’s OK to do this.’ Try it – if doesn’t work, you won’t get dinged for it.”
New technology needs to be integrated into systems in ways that will be continually adaptable, she said. “You’ve got to think creatively and you’ve got to think long-term.”
SEPA’s Renovate Initiative has been looking into all these issues and offers something of a blueprint on how to go about it.
The rate structure I inherited when I came to Connecticut – and I’ve been pretty vocal about it – is in need of desperate, desperate change.”
Gillett at PURA has been thinking along the same lines as she tackles grid mod. But she wants to put things in place logically. That will likely mean the last piece will be a new rate structure designed to incentivize all the grid mod components that came before it.
“The rate structure I inherited when I came to Connecticut – and I’ve been pretty vocal about it – is in need of desperate, desperate change,” she said. “We’re lacking metrics for the most basic things in this state. This performance-based rate making conversation – it’s great. But I’m telling everyone I inherited a system that doesn’t even have the basics of that.”
She’s referring to the kind of advanced metering, also called smart meters, that can let a utility instantly know what’s going on with each customer. UI has it mostly in place, but Eversource has just submitted its plan to PURA so still has a long way to go.
A key question is whether legislation would be the most efficient way to put statutes in place to help PURA force utilities’ hands.
“We welcome and are willing to take a look at any recommendations that will result in a more robust electric system for our customers,” said Eversource spokesman Mitch Gross. “We have a performance-based regulatory plan in place in Massachusetts and see the future trend here in Connecticut to be the same.”
He noted that, in addition to advanced metering, the company has proposed systems for commercial and residential battery storage and electric vehicle charging.
“With all due respect to Eversource and the army of lobbyists that they employ along with UI, when things go into legislation that deal with complicated issues like rate-making, I’m worried that they get unintentionally obscured,” Gillett said. “So I’ve just been advocating that we try to figure this out through our own organic process.”
To be clear, no full performance-based utility model exists in the U.S. Pieces of it – mostly involving energy efficiency – are being tried. New York state’s Reforming the Energy Vision, the REV initiative, has been most notable for such efforts. The Rocky Mountain Institute has a recent report on how such models can operate.
There are lots of ideas and technologies out there designed to move utilities into a new era. But it seems each time a storm wreaks havoc on Connecticut’s power lines, the knee-jerk reaction is to bring up the old idea of burying them.
The new ideas
In 2011, after Irene hit, but before the devastating snowstorm that October knocked out power for more than a week to the northern half of the state, undergrounding – as it is often called – was researched and deemed too expensive. Particularly in the case of existing lines.
That conversation is back – especially after Isais knocked out a hefty number of water, wastewater and pumping station systems. FEMA reported more than three-dozen water systems on backup power. DEEP reported 33 of the 89 municipal wastewater treatment plants it regulates were on backup, with one unable to operate after its emergency generator ran out of fuel and another six providing only partial treatments. Of 1,080 pumping stations, 275 lost power or were operating on backup generators.
Strategic undergrounding seems to be the new mantra – for things like treatment plants and other critical structures. The cost argument – given the number of line replacements in the last decade – is starting to lose some of its steam – even with the old rule of thumb that it can cost as much as $1 million a mile to put existing lines underground. So does an old argument that finding underground problems is much harder than finding them in overhead lines. There are now communication technologies that can be buried with the lines that can automatically find problems.
“It’s a discussion we should be having,” said Brenda Kupchick, Republican first selectwoman of Fairfield. Sixty-seven percent of Fairfield customers – all in UI territory – lost power in Isaias. Kupchick was in the legislature during the 2011 storms and served one term on the energy committee. “Your eyes roll back in your head with the amount of technical information,” she said.
Her view on whether some potentially expensive fixes should be considered has changed a bit. “This is going to happen again and again and again. The legislature needs to be looking at this,” she said. “We can’t just keep doing the same old things. Now that I’m actually running a town – having power out for a week – everything stops.”
Sen. Paul Formica, R-East Lyme, ranking member on the energy committee, reiterated the ‘who pays’ question and noted the time factor: “what you plan now would take 20 years,” he said.
But any major modernizations, had they been started post-Irene or Sandy in 2012, would be halfway done by now. In fact, any number of municipalities now put lines underground as new areas are developed, but unless redundancies are built into the system, they’re still at risk for outages if the lines leading to the underground lines go down.
But there are other technologies out there that could help keep power on and be considered components of performance-based grid models. Microgrids – a way to isolate areas to keep the power on even if the wider grid goes down — is one. Microgrids can also serve as a decentralizing component of the larger grid – something that helps with power distribution even when there’s no outage.
Other technologies that offer both resilience and metrics for utility performance models are improved interconnection systems that allow the utilities to move power around the system. Eversource and UI do some of that now, but without advanced metering it’s limited.
Once that metering is in place, all kinds of flexibility would be possible, including optimizing power distribution from places not using much power to places that need it during normal operations. Grid integration with buildings is another tool – again as a way to adjust load, saving money in the process.
One of the biggest benefits would involve increasing the amount of what’s formally known as distributed energy resources, or DER, which are most commonly seen in the form of solar people have on their roofs. During high power generation by the panels and low home power usage, the utilities would be able to re-distribute it more effectively.
These are all components of non-wire alternatives that also features energy efficiency – a way to use less power and optimize what’s available. The key will be a regulatory structure that incentivizes a less-is-more paradigm for the utilities, since they stand to make less money than under the current cost-of-business system.
Among the most radical potential changes to old utility models on the horizon is the entry of third party operations – something that Advanced Energy Economy has looked into. The utilities build out the platform, but third parties provide the software needed to run them and the upgrades needed as technology improves. And those third parties pay – not the utilities or their customers.
“We’re already seeing this with large data centers – the Microsofts and Facebooks of the world who can’t afford the grid to go down,” said AEE’s Frantzis. “They’re taking power into their own hands – doing their own grid resiliency.”
This is an opportunity to talk about the big fixes – things that should have happened a long time ago.”
“I do worry that just continually putting poles and wires back up and not integrating some of these advances is probably not the optimal way to go,” she said. “The cost of not doing them – staying with the status quo – has significant consequences.”
Reality checks
Some ideas, though initially appealing, require more scrutiny.
Breaking up Eversource as U.S. Sen. Richard Blumenthal has advocated, while technically legal and doable under very specific circumstances, includes multiple layers of approval which will take a long time and cost a ton of money, experts say. In the end, you’ve moved the same old grid to a new owner.
Community choice aggregation – the idea of communities banding together to buy cleaner, cheaper power — also won’t achieve better power distribution because it’s about purchasing power, not distributing it. You can have the cleanest, cheapest power in the state, but if the delivery system goes down, you’ll be sitting in the dark like everyone else.
But the biggest idea is conversion to municipal utilities, of which there are already a handful in Connecticut. Wallingford is one. At its peak during Isaias, 16% of the customers were out at any given time. That was down to less than 2% within 48 hours and everyone was back by 8:30 pm Saturday – 5 days in – according to Tony Buccheri, general manager of Wallingford’s municipal electric department.
Buccheri notes that Wallingford’s overhead lines use a more durable system known as a Hendrix spacer cable instead of the traditional cross-arm support you see on most utility poles. And new neighborhoods are required to put wires underground. But, he said, with all the underground congestion now from sewer, water and gas, undergrounding everything is difficult.But his biggest caution is for those who see municipal electric companies as a panacea. Wallingford has never existed any other way.
“That’s the way it’s always been for 121 years. For a municipality to do it now – they’d have to work with Eversource or UI, buy their assets and then form an electric company,” he said. “They’d lose on taxes that utilities pay. They would have to own, operate and maintain the system. It would have been great to do 120 years ago.”
Reform or reprimand?
“This is an opportunity to talk about the big fixes – things that should have happened a long time ago,” said Rep. Jonathan Steinberg, D-Westport, a long-time member of the energy committee and among the few members steeped in the wonkiest technicalities of its subject matter.
Steinberg wants to see new incentives and compensation models for the utilities, smart meters in every home, smart transformers, undergrounding of some main distribution lines, and more genuine microgrids. But if history is any indication, future legislative action will involve slow, baby steps preceded by special commissions and studies. Trees will be trimmed and storms will come and go.
“At the PURA hearing and the E and T hearing everybody’s going to be shaking their fist and vowing vengeance,” he said during an interview last week. Steinberg was right: Eversource faced unrestrained fury from elected officials during the Monday PURA hearing. The Energy and Technology Committee forum is today at 10:30 a.m.
DEEP Commissioner Dykes, however, is not concerned punishment will become the focus. “I’m not worried about that,” she said. “There’s already been a lot of effort and focus in the PURA process on modernizing the electric grid. I don’t worry that that focus will be diminished.”
PURA’s Gillett believes with grid mod, the state is on the right path.
“But we need to be making sure there are no knee-jerk reactions,” she said. “What can we do in the interim to make sure utilities don’t start rebuilding in reaction to the storm in a way we’re not going to continue to support moving forward?”