One California Utility’s Blackout Strategy Is a Wake-Up Call for Business Resiliency Planning

By: | October 21, 2019

Les Williams, CRM, is Co-Founder and Chief Revenue Officer of Risk Cooperative. He holds a B.S. in Mechanical Engineering from the University of Virginia and an MBA from Harvard Business School. Prior to joining Risk Cooperative, Les served in various institutional sales positions at SoHookd, JLL, and IBM.

Dante Disparte, founder and chairman of Risk Cooperative, recently co-authored a book entitled Global Risk Agility And Decision MakingThe early chapters of the book discuss an issue that many risk managers strive to achieve: Addressing one risk while not creating a new one.

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The book takes a lesson from the tragic Germanwings disaster: “Ironically, in protecting against a known risk, we can be exposed to entirely new forms of risk … fortified cockpit doors certainly made flying in commercial airplanes safer — or at least created the placebo effect of safety. However, in so doing, what seemed like an incredibly remote risk — being exposed to a suicidal airline pilot — manifested itself with great ease …”

Pacific Gas & Electric’s (PG&E) recent decision to cut power to 800,000 homes and businesses was a very difficult one for the utility. The actions taken stem from the record-setting 2018 Camp Fire caused by their malfunctioning equipment in the field.

The Camp Fire plunged PG& E into bankruptcy, and the utility’s mass outage seems to be taken out of an abundance of caution based on this past tragedy.

While nursing homes were evacuated; schools were left dark; and food, water and generators quickly disappeared from store shelves; the risk of a repeat Camp Fire was too great in the eyes of the utility. Other utilities in California, such as Southern California Edison and San Diego Gas & Electric, have considered pursuing this option as well, but PG&E is the only company in the nation conducting this operation on such a large scale.

On one hand, if PG&E did not conduct this exercise and their equipment accidentally sparked another wildfire, there would be a deafening outcry from the public. On the other, as is currently the case, PG&E cuts power on a large scale and hundreds of thousands are plunged into darkness. This is a classic Catch-22 scenario.

Part of the issue at hand is technical in nature. According to the San Francisco Chronicle there are tools available to prevent such a large blackout — one such method involves the use of devices allowing localized blackouts to avoid disruption on a massive scale.

PG&E does have this technology available in some parts of their grid, but it will take many months to deploy across its entire infrastructure. The situation is reminiscent to the Great Blackout of 2003, in which a tree branch in Northeast Ohio touching high voltage lines started a chain of unbroken events that resulted in the largest blackout in U.S. history, affecting approximately 50 million people.

One single point of failure in the power grid in Ohio that day is eerily similar to what Californians are facing; PG&E’s interconnected power grid needs more redundancy to prevent having to shutter operations on such a large scale.

Homes and businesses in California, and across the nation, can use this unprecedented planned blackout to revisit their own resiliency plans.

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Are all backup generators functioning properly, and do homes and businesses have backup generators in the first place? Are flashlights fully charged and easily accessible? Are automobile gas tanks kept full on a consistent basis?

Businesses must revisit their own continuity plans, including analyzing insurance policies with their risk manager, especially because rolling blackouts are likely to occur in the future regardless of size and scope.

Business continuity plans go above and beyond simply preparing for planned blackouts. With climate change causing more calamities like severe storms and droughts, we must be prepared for all types of interruptions in our daily lives.

Better preparation will help keep Americans out of the dark. &

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The R&I Editorial Team can be reached at [email protected]