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Energy Industry Weighing Impact of Coronavirus

Due to the COVID-19 pandemic, utilities and power generators around the globe are modifying their business practices and rapidly developing strategies to address the crisis. In the case of electricity, this is especially critical, since a reliable supply of electricity is essential to prevent even more widespread economic disruption.

Power magazine recently reported that “The U.S. Department of Homeland Security (DHS) lists utilities among the 16 industries that the agency considers critical infrastructure sectors, including power plants, dams, and nuclear reactors, along with transmission systems.”

In a recent memo to its members, the leading utility trade group Edison Electric Institute (EEI) said that as many as 40% of utility workers could be directly impacted by the coronavirus, either through personal illness, being placed in quarantine, or called away to care for other sick family members. Quite a few utilities, like other businesses, have established telework protocols for their office staff, allowing non-critical employees to work from home.

Crisis Planning On-the-Fly?

According to EEI, planning for a pandemic is different from other natural disasters because the situation is not limited by geography, rather impacting a wide area—in this case, the entire world. EEI also said preparations must be done with an eye toward a long-duration event. The Department of Homeland Security (DHS) has also said that power utilities are an important part of the response to a pandemic.

“This type of situation, and its preparation, is what utilities live for,” said Mike Byrnes, senior vice president of Veolia North America, and chief operating officer of energy consulting firm SourceOne. “I worked for ConEd [Consolidated Edison in New York], and the guys really think about these things and they know how to prepare for them. They all pull together. They did it after 9/11, after the first World Trade Center bombing, after Hurricane Sandy. This is when the red tape goes out the window, and everyone gets done what they need to get done.”

While this might fly in the face of what we think about bureaucracies, it appears that in the face of this pandemic, much of what Byrnes is saying does ring true. He said that Veolia’s staff has been discussing plans to deal with the coronavirus for weeks, considering issues such as whether they have enough staff, what they might do if an entire plant came down sick and whether or not they will have to lock staff in to keep operations going.

Byrnes said that each of Veolia’s plants has at least two weeks of food and water in place, and they’re always looking at how they can cover for their people if they get sick.

Travel Restrictions and Infrastructure Safeguards

A lot of utilities have enacted travel restrictions or bans on non-essential travel for their staff, along with shifting in-person meetings to teleconferences. ISO New England, the grid operator for six states in the Northeast, last week said it “has been closely monitoring the spread” of the virus and outlined precautions it has taken, including banning all international business travel. PJM Interconnection, another regional transmission organization, suspended all business travel for its staff, both international and domestic.

These are issues that have proven to be of great concern to energy consumers, who worry about service interruptions. In a recent statement to the press, David Hutchens, chief executive of UNS Energy (the parent company of Tucson Electric Power) said “I want you all to be assured that the health and well being of our employees and customers and community are absolutely paramount. Obviously our service is absolutely critical. Electric service in our state and across the nation has to be the focus right now because without that nothing else works.”

Reduced Power Demand

As reported by Power magazine, utilities are also looking at the impact of lessening demand for power from commercial and industrial (C&I) enterprises, and the possible rise in consumption from the residential sector, with schools and businesses closed and people ordered to work from home. As U.S. officials consider more measures to prevent the spread of the virus, beyond the closure of schools and businesses, the potential for what’s known in the energy industry as “demand destruction”—something usually reserved for areas in the wake of natural disasters—could become a reality.

Some utilities along the U.S. West Coast have begun reporting drops in demand for power. Snohomish County Public Utility District outside Seattle (one of the areas hit hardest by COVID-19 so far) reported a 3% drop in electricity demand on Monday. Portland General Electric, which serves customers in Oregon, also reported declining demand. Veolia’s Mike Byrnes said that his group was unsure of the eventual impact of COVID-19 on power demand, but added: “In our side of the business we manage a lot of commodity contracts for customers, and to be conservative, we’re figuring consumption will drop by 10%. Right now we’re in the shoulder season, and everyone is going through their maintenance outages, and I’d be more concerned about that impact on the power grid.”

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