Lindsay Kishter
The Price of Inaction is the Cost that Matters
Lindsay KishterJuly 25, 2013

Energy utilities in the United States have been warned: the nation’s ability to produce and deliver electricity and oil and gas supplies is being threatened by a trifecta of climate trends. These include:

  • Rising air and water temperatures
  • Decreasing water availability
  • A growing intensity and frequency of storm events and flooding while sea levels rise

Outlined in a new U.S. Department of Energy report, these findings that the electric grid and fuel infrastructure are vulnerable to climate change aren’t so much news as they are a continued steady drumbeat of messaging (the report delivers an excellent assessment of the ways we now see this play out—check out this interactive map to see for yourself). The problem, of course, isn’t that utilities haven’t gotten the memo—it’s that they don’t make investment decisions in a vacuum. Regulated electric utilities typically cannot justify the costs of upgraded infrastructure and advanced technologies without rate recovery. And that requires support from regulators and the public. In other words, we’re the ones this report needs to convince.

New Jersey’s PSE&G offers a prime example. The utility lost a peak of 2 million of its 2.2 million total customers during Hurricane Sandy in October 2012, and by February had delivered a $3.9 billion proposal over 10 years to make New Jersey “Energy Strong.” About $1.7 billion is dedicated to hardening existing infrastructure, while about $650 million would go toward advanced grid technologies.

But now, a mere eight months after the region got a crash course in infrastructure vulnerabilities, covering the costs of upgrades remains a contentious issue as the board of public utilities considers the requested 6%–8% increase on PSE&G utility bills.

The DOE report makes it clear: stronger storms are coming and bringing greater impacts along with them. But will we have to wait until they arrive to muster public and regulatory support for infrastructure investment? And how do we hold onto that post-disaster feeling that we need to be more resilient?

The answer lies in quantifying the impacts of climate change, showing the real costs and benefits of resilience improvements, and perhaps most importantly, putting a price on inaction. This is where DOE sees a role for better information—through climate data, models, and tools—and greater engagement between infrastructure planners and the user community.