2014 Reports

The Day After Tomorrow: A Survey Of How Gulf Coast State Utility Commissions and Utilities are Preparing for Future Storms

Carey, Katherine

With widespread outages caused by devastating natural disasters such as Superstorm Sandy and Hurricane Ike in the nation’s recent memory, the public wants to know that the electric utility industry is prepared to withstand and respond to the storms of the future. But is the industry prepared? The government’s role in regulating the electric utility industry makes it impossible to properly analyze why industry players are prepared or unprepared without looking at the actions and decisions of the state regulatory officials. The industry’s actions are inherently tied to the regulations it is required to follow and the costs it is allowed to recover. State public service commissions are tasked with allowing investments and setting rates for the electric utility industry that are “just and reasonable” and “in the public interest.” These vague guidelines have led to many different approaches to investments, cost recovery, and rate-setting. State commissioners are tasked with finding the balance between keeping costs low today and ensuring service remains reliable for their ratepayers in the future. With one of the worst economic recessions in U.S. history and predictions for tomorrow’s climate trends worsening every year, are state commissions striking the proper balance? Part I of this Note gives a brief introduction to the role of state commissions within the electric utility industry, with a focus on why this matters in the context of the important discussion taking place today on climate change trends and, more specifically, preparing for tomorrow’s storms. Part II presents a summary of what actions, if any, Gulf Coast state commissions have taken regarding resiliency measures and storm hardening and how some major utilities have responded to those actions, or alternatively, how utilities have acted when little commission action has occurred. Part III provides an analysis of the results of the survey and recommendations going forward.