Daniel Case
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Risk Management for Utilities

Nov. 12, 2013
Whose responsibility is risk management at an electrical utility?

Whose responsibility is risk management at an electrical utility? In some cases that responsibility falls on specific management positions, and in others it’s spread over all management. Some utilities have Risk Management departments. Regardless of the structure, risk management has emerged as a key issue for utilities.  

Tree-caused outages typically lead all other causes of unplanned outages on distribution systems. From a reliability perspective, one would think trees would be a primary area of focus for risk management.  Add to that the history of damages due to power line-initiated wildfires, and you would think obtaining a clear understanding of tree risks and the avenues for mitigating those risks would be one of the primary endeavors of any utility that has an overhead distribution system. Let’s also consider the ancillary risks of having to pay performance penalties, public relations disasters and if you are in senior management, the loss of your job.

It all leads to the reasonable conclusion that trees must be, if not at the top of the list certainly among the top few areas of focus for risk management. However, such a conclusion would be wrong. I recognize this is an incendiary statement, which utility employees, particularly management, must deny. It may be old school but actions speak louder than words. If you were to really get a handle on the risks associated with tree-power line contacts where would you turn? Who would you talk to? I haven’t seen risk managers or senior utility executives at the Utility Arborist Association sessions at the International Society of Arboriculture conferences. Oh, yes risk managers got involved in the development of the FERC/NERC regulations after the great Northeast blackout. But is compliance the extent of electric utility risk management?

We can probably agree that to manage a risk you need some measure of the size or scale of that risk. Further, without a measure of the size of the risk, how do you communicate to regulators and the public what are realistic expectations for system performance and the specific options for improving that performance and risk reduction along with the associated costs and predictable benefits?

So here’s the key question. How many trees do you have along your system that on failure could interrupt service and possibly start a wildfire?

In the last couple of issues of Vegetation Management Insights I argued that the risks associated with tree-power line contacts are really a societal issue. If you work for a utility you probably agree with that position. How is that argument going to gain traction and ultimately arrive at recognition and acceptance? By presenting to the regulator and the public the real and unassailable facts. Let me give you an example.

On hearing that her transmission system had 4.3 million trees that could, on failure, interrupt service, the VP asked for implications. Here is what she was told. “It’s not uncommon during a major wind storm with 60 mph or greater winds to have some form of failure in 1-2% of the tree population. Let’s use the 1%, that’s 43,000 tree failures. Based on your average arc of line exposure to trees, which is 0.05, you can expect 2150 of those trees will make line contact on failure. Consequently, on a system of just over 2100 miles, if the whole system were to experience these winds it should be expected that every mile with treed edge will have tree contact incidents.”

To reiterate the question, how many trees do you have along your system that on failure could interrupt service and possibly start a wildfire?

Answering this question will lead you to understand that you cannot eliminate all risk of tree-power line contacts. It will guide you in arriving at what residual risk provides a balance between costs and risk. It will also lay a foundation for managing regulator and customer expectations. And is that not also risk management?

As I see it, if we are to arrive at the understanding that VM risk management is a societal issue, not solely a utility issue, there are two essential steps. We must provide regulators with data that makes the risk clear. In so doing, not only do we communicate realistic system performance expectations but it also provides a path to funding support. Simultaneously we must be actively engaging landowners. We must have succinct yet compelling talking points, which make the risks of tree retention and limited funding clear.

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