Long Island utility exec resigns, hurricane response blamed

The Long Island Power Authority announced this week that its Chief Operating Officer, Mike Hervey, has resigned from LIPA effective at the end of 2012.

LIPA is a political subdivision of the State of New York.  LIPA was formed in 1985 as a non-profit municipal electric utility to take over the assets of former investor-owned utility Long Island Lighting Company.  Today, LIPA owns the electric grid in most of Long Island.  LIPA does not own electric generation assets on the island but serves 1.1 million customers with electricity generated off-island.  Its electric distribution network was hard hit by Hurricane Sandy, with over 1.1 million customers losing power.  As of earlier this week, 10,000 customers just east of New York City were still without power, while 35,000 more farther onto Long Island suffered significant flood damage and will need repairs before electric service can be restored.  County executives and other leaders are calling for federal involvement, and have criticized LIPA for its management of the restoration process.

In a statement released November 13, LIPA Chairman Howard E. Steinberg stated that he had accepted Hervey's resignation, with regret, on behalf of the Board of Trustees.  The announcement noted that Hervey had worked for LIPA for 12 years, including serving as CEP for two years.

Also on Tuesday, New York Governor Andrew Cuomo formed a commission to investigate utility companies' storm preparedness and management.  Governor Cuomo used his powers under the Moreland Act to form the commission, whose mandate also includes an examination of the regulatory and legal structures for oversight of utility operations.  Citing storms including Hurricane Irene, Tropical Storm Lee, and Hurricane Sandy in the past two years, Governor Cuomo also addressed the adaptation process of adjusting "to the reality of more frequent major weather incidents".

One utility executive has already resigned, and the commission's investigation will soon be under way.  What other changes lie ahead for utility companies in New York and elsewhere as a result of utility responses to hostile weather?

Hurricane Sandy's effects on energy

Hurricane Sandy is expected to make landfall near the southern coast of New Jersey this evening.  The storm has already dealt damage to Cuba, Jamaica, and Haiti, and is expected to carry significant storm energy northward into the mid-Atlantic and northeastern United States.  Power outages are already being reported, but many more are expected: according to a Johns Hopkins engineering model, up to 10 million people may lose electricity in the mid-Atlantic over the next week.  Utilities are already staffing up and hiring external contractors to assist in the storm recovery efforts.  State governors are declaring a state of emergency to waive limits on how many hours utility workers can drive and work, to allow workers from other states and Canadian provinces to assist.

Hurricane Sandy's effects on energy are not limited to electric infrastructure.  Petroleum refineries - and by extension oil and gas markets - will also be impacted by the storm. According to a situation report released this morning by the U.S. Department of Energy's Office of Electricity Delivery & Energy Reliability, at least one petroleum refinery has already shut down.  Phillips 66's Linden, NJ refinery has shut down its production; the Linden refinery is capable of producing 238,000 barrels per day.

The report also cites trade press reports indicating reduced production at two other mid-Atlantic oil refineries, Philadelphia Energy Solutions’ Philadelphia, PA refinery (335,000 b/d capacity) and PBF Energy’s Delaware City refinery (182,200 b/d capacity).  Hurricane Sandy's impacts to refineries are not limited to those processing crude oil; the report also cites reduced production rates at Hess Corporation’s Port Reading, NJ facility (70,000 b/d capacity), which processes gas oils to produce petroleum products.

Collectively, these refineries do not account for a significant portion of the nation's refining capacity.  However, the impacted facilities' concentration in the mid-Atlantic may temporarily raise gasoline prices in the mid-Atlantic and northeastern U.S.  A key factor affecting the extent of this price bump will be how quickly the refineries can return to full production.

When tomorrow morning comes, the storm's direct impacts will be well underway, as will restoration efforts.  Last year's October storm, Hurricane Irene, left many electric utility customers without power for over a week.  How will Sandy compare to Irene?

Susquehanna River flooding threatens dam, communities

Close on Hurricane Irene’s heels, the remnants of Tropical Storm Lee are dropping up to 10 inches of rain across the northeastern United States.  As we saw when Irene hit Vermont, storms like this can cause not only widespread flooding as streams rise above their banks, but even risk dam failure and more catastrophic flooding.

Now, the rains caused by Tropical Storm Lee have led authorities from Maryland to New York to order the evacuation of nearly 100,000 people.

Flooding along the Susquehanna River is responsible for a large portion of this risk.  Arising out of branches in upstate New York and western Pennsylvania, the 464-mile long Susquehanna is the longest river on the east coast to drain into the Atlantic Ocean.  The river overtopped retaining walls in Binghamton, NY earlier today, leading to road closures that effectively isolate the city.  Downstream, deepening floods have caused the evacuation of the entire city of Wilkes-Barre, PA.

The Susquehanna flooding has also impacted the Conowingo hydroelectric dam about 10 miles above the river’s mouth in Maryland.  With 11 turbines providing a nameplate capacity of 572 megawatts, the Conowingo dam is one of the nation's largest non-federal hydroelectric facilities.  Now operated by Exelon subsidiary Susquehanna Electric Company, the Conowingo Dam is threatened by the Susquehanna floodwaters.  As a result, 50 of the dam’s 53 flood control gates have been opened, causing authorities to evacuate people from the downstream communities of Havre de Grace and Port Deposit.  Area residents remember 1972's Hurricane Agnes, whose rains and flooding caused all 53 flood gates to be opened and the dam operator to prepare for a controlled breach of part of the dam.

As Lee’s rains move out of the area, water levels in the Susquehanna River will peak and then recede.  Time will tell how damaging the flood waters will be.         

Maine dam safety in question

Dam safety is an important issue.  As Hurricane Irene demonstrated at the Marshfield Dam in Vermont last month, storms (and other conditions like earthquakes) place significant stresses on dams.  When the stresses become too severe, the risk of dam failure increases, placing people downstream at risk.  Some dams do not survive these conditions, such as Colcord Pond in Porter, Maine which blew out in March of 2010.

Water spills over the Doughty Dam in North Berwick, Maine.  This site provided power to numerous mills over the past centuries.

While the Federal Energy Regulatory Commission has jurisdiction over many aspects of most hydroelectric dams, states have asserted an interest in ensuring the safety of people and property near other dams and dammed rivers.  Maine enacted a dam safety law in 2001 creating a safety inspection and enforcement program through the state Department of Defense, Veterans and Emergency Management.  Under this program, dams are inventoried and categorized by their hazard potential, ranging from low hazard potential (minimal losses, primarily to the owner's property) to high hazard potential (misoperation or failure could “probably cause loss of life").

Investigative journalists recently revealed that the state was 2 to 7 years overdue for inspections of half of its high hazard potential dams, Records are missing for the inspection of other dams, and only 3 of the state's 24 high hazard dams were documented as being inspected on time.  The journalists suggested that the state dam inspection office was severely understaffed for the workload required by the dam safety statute.

While the condition of many dams may not be known by the state, some dams' conditions are well-documented.  A number of older reports have showed that many dams were deteriorating and nearing the end of their design life.  Many of these dams do not have hydroelectric generation, but rather maintain a lake level.  Many formerly provided mechanical power to people working at the site, in the form of waterpower harnessed under the riparian owner's mill privilege, but fell into disuse with the spread of fossil fuels and utility-provided electricity.

The condition of each dam, and what if anything should be done about it, is a fact-specific question that must be answered on a case-by-case basis. Different philosophies exist on how to protect public safety while respecting dam owners' private property rights.  Nevertheless, the safety of Maine's state-jurisdictional dams is an important issue to consider.