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.”