After Irma, Can Private Utilities Be Trusted to Rebuild?

There’s an opportunity post-Irma to revolutionize Florida’s power supply, but Big Energy is not likely to rise to the occasion.

Kate Aronoff September 18, 2017

Scores of power lines were down along Corkscrew Road near Estero, Florida because of the high Hurricane Irma winds September 11, 2017. (Photo by Michael S. Williamson/The Washington Post via Getty Images)

In the com­ing days, mil­lions of Florid­i­ans will return home to rebuild in the after­math of Hur­ri­cane Irma. Also now tasked with rebuild­ing are Florida’s major util­i­ties — com­pa­nies like Nex­tEra Ener­gy, Inc., Duke Ener­gy and Emera Inc.

These com­pa­nies face a choice: To dou­ble down on a util­i­ty mod­el that’s vul­ner­a­ble to storms and fuel­ing more bru­tal ones, or start tran­si­tion­ing to a grid bet­ter equipped to han­dle hur­ri­canes — and help keep them from get­ting worse. The ques­tion is whether they can be trust­ed to choose well.

As of Fri­day, rough­ly 3.8 mil­lion Flori­da res­i­dents were with­out pow­er. The state’s util­i­ties will have to restore elec­tric­i­ty to their cus­tomers while recon­struct­ing vast swaths of the state’s trans­mis­sion lines and gen­er­at­ing capac­i­ty. Flori­da Pow­er & Light Com­pa­ny (FPL) — a Nex­tEra sub­sidiary and the nation’s third-largest pow­er providerwarns that it could take weeks before all of its cus­tomers are able to turn their lights back on. FPL pres­i­dent and CEO Eric Silagy called the scale of the out­ages unprece­dent­ed,” and one com­mu­ni­ca­tions rep­re­sen­ta­tive from the same util­i­ty said that what lies ahead is going to be a very, very lengthy restora­tion, arguable the longest and most com­plex in U.S. history.”

There’s an oppor­tu­ni­ty post-Irma to rev­o­lu­tion­ize Florida’s pow­er sup­ply, but not one that com­pa­nies like FPL are like­ly to take advan­tage of. As a recent report from Insid­e­Cli­mate News found, FPL start­ed spon­sor­ing research into cli­mate change in the ear­ly 1970s before even­tu­al­ly get­ting involved in efforts to sup­press evi­dence of ris­ing tem­per­a­tures. The South­ern Com­pa­ny, which owns Pan­han­dle elec­tric­i­ty provider Gulf Pow­er, for decades con­tributed to pub­lic rela­tions cam­paigns cast­ing doubt on the exis­tence of cli­mate change, and fun­neled hun­dreds of thou­sands of dol­lars into bogus cli­mate skep­tic research.

Like their coun­ter­parts in oth­er states, Flori­da util­i­ties have gone to war with clean ener­gy, too. Last year, they poured a col­lec­tive $21 mil­lion ($8 mil­lion from FPL alone) into an unsuc­cess­ful bal­lot mea­sure aimed at stunt­ing var­i­ous kinds of third-par­ty financ­ing for solar pow­er. Beyond that effort, investor-owned util­i­ties are a force to reck­on with in Flori­da pol­i­tics; the sec­tor employs one lob­by­ist for every two state leg­is­la­tors — the most of any indus­try. This spring, FPL was found to have writ­ten whole sec­tions of anti-solar leg­is­la­tion spon­sored by state rep­re­sen­ta­tive Ray Rodriguez, who had pre­vi­ous­ly accept­ed $15,000 from the utility.

With major util­i­ties aligned in oppo­si­tion, the road to renew­ables’ pro­lif­er­a­tion in Flori­da may not be an easy one. John Far­rell, direc­tor of the Ener­gy Democ­ra­cy Ini­tia­tive at the Insti­tute for Local Self-Reliance, says that poli­cies to tran­si­tion Florida’s elec­tric­i­ty over to renew­ables could go a long way toward being able to get lights back on more quick­ly after major storms.

In an ide­al rebuild­ing process, Far­rell told In These Times, What we would see is, from a pol­i­cy stand­point, that [util­i­ties] would be more sup­port­ive of ways cus­tomers could build their own pow­er gen­er­a­tion. In a sys­tem like we have today, if one pow­er line is knocked out, it can affect tens of thou­sands of peo­ple … If we have lots of dif­fer­ent pock­ets of gen­er­a­tion, we can fig­ure out ways to fill in the gaps.”

The sys­tem Far­rell describe is what’s known as a micro­grid. The basic idea behind a micro­grid is to have a bound­ed geo­graph­ic area reliant on the same set of pow­er sources that can be oper­at­ed inde­pen­dent­ly of a larg­er elec­tric grid, or island­ed,” in ener­gy-wonk par­lance. This allows homes and busi­ness­es to share pow­er, mean­ing if pow­er gets shut off dur­ing a storm, enti­ties that get their pow­er from the micro­grid can keep their lights on.

Under Flori­da law and that of sev­er­al oth­er states, such a prac­tice is ille­gal, as it would mean under­cut­ting util­i­ties’ legal­ly pro­tect­ed monop­oly. The vast major­i­ty of solar arrays are cur­rent­ly tied to the elec­tric grid by law, mean­ing they shut down when the pow­er goes off.

Unsur­pris­ing­ly, FPL lob­by­ists have fought to keep this statute on the books. If util­i­ties allowed micro­grids — whether ser­vic­ing large insti­tu­tions or small com­mer­cial and res­i­den­tial areas — they could help main­tain pow­er in a del­uge. Instead, accord­ing to FPL pol­i­cy, even ratepay­ers with solar pan­els, who could fea­si­bly keep their lights on dur­ing an out­age, are for­bid­den from doing so. Renew­able gen­er­a­tor sys­tems con­nect­ed to the grid with­out bat­ter­ies are not a stand­by pow­er source dur­ing an FPL out­age,” the utility’s hand­book states.

The prob­lem, Far­rell notes, is root­ed in FPL and oth­er pri­vate elec­tric­i­ty providers’ busi­ness mod­el. This is true of investor-owned util­i­ties in all states like Flori­da, where there are monop­o­lies: Their mon­ey for the share­hold­ers comes from get­ting a rate of return from cap­i­tal they spend, and build­ing some­thing like a pow­er plant,” he told me. The util­i­ty can build a micro­grid and make mon­ey from it, but that would mean doing some­thing different.”

Being able to keep pow­er on in the way that micro­grids allow for could prove espe­cial­ly use­ful for places like hos­pi­tals and oth­er insti­tu­tions that pro­vide essen­tial and ener­gy-depen­dent ser­vices. It may have even saved lives this past week. Thir­ty-six hos­pi­tals in Flori­da closed as a result of Irma, and eight peo­ple were found dead in a swel­ter­ing Hol­ly­wood, Fl. nurs­ing home where a pow­er out­age left more than 100 res­i­dents with­out air con­di­tion­ing. (Exact caus­es of death are still being investigated.)

It’s not as if there aren’t exam­ples of what a more inno­v­a­tive recov­ery could look like. In the wake of Hur­ri­cane Sandy, storm-impact­ed states extend­ed financ­ing to towns that want­ed to devel­op micro­grids. As a result, Con­necti­cut became the first state to roll out a statewide micro­grid pro­gram for busi­ness­es and pub­lic ser­vices to main­tain pow­er dur­ing out­ages, and cities such as Hobo­ken, N.J. and Fair­field, Conn. each accept­ed their states’ offers.

New York launched a $40 mil­lion com­pe­ti­tion called New York Prize, aimed at mak­ing pow­er sys­tems more resilient, with a focus on micro­grid tech­nol­o­gy. Sandy was a launch pad for New York’s Reform­ing the Ener­gy Vision,” a 2013 plan to dras­ti­cal­ly alter the state’s ener­gy reg­u­la­tion land­scape. Even New York City’s biggest and hard­ly pro­gres­sive util­i­ty providers — PSEG and ConEd — launched new grid man­age­ment pro­grams in the months after the storm.

Like PSEG and ConEd in New York, there are plen­ty of play­ers jump­ing on the micro­grid band­wag­on for pure­ly prag­mat­ic rea­sons. For­mer FERC chair John Welling­hoff sung their prais­es, cit­ing the threats to cyber­se­cu­ri­ty posed by a high­ly cen­tral­ized grid. The Depart­ment of Defense rec­og­nizes micro­grids as a key way to pro­tect elec­tric­i­ty against ter­ror­ism and cyber­at­tacks. Fol­low­ing a direc­tive in 2011’s Nation­al Defense Autho­riza­tion Act, the mil­i­tary is cur­rent­ly deploy­ing them in its oper­a­tions around the world. Rick Perry’s Depart­ment of Ener­gy recent­ly announced that it would devote $50 mil­lion to research into microgrids.

Micro­grids are even mak­ing some head­way in Flori­da. Duke Ener­gy — anoth­er major elec­tric­i­ty provider there — had shown inter­est in micro­grids even before Irma. The util­i­ty is part of a $32 mil­lion push from the Depart­ment of Ener­gy into Resilient Dis­tri­b­u­tion Sys­tems. The ini­tia­tive is one part of a $50 mil­lion fund­ing round that includes $20 mil­lion for a series of cyber­se­cu­ri­ty projects.

Dis­trib­uted ener­gy is also trendy in Sil­i­con Val­ley, as well as often-over­lap­ping green tech cir­cles. In the Bay Area, Tes­la and the city of San Fran­cis­co are each work­ing to get micro­grids online in the event of a major earth­quake. One green tech sum­mit in Oak­land last year, VERGE16, pow­ered itself entire­ly off of a microgrid.

The tech sector’s excite­ment makes sense. To major — and espe­cial­ly monop­oly — util­i­ties, micro­grids are an inher­ent­ly dis­rup­tive tech­nol­o­gy, and repli­cate some of the lib­er­tar­i­an-tinged shar­ing econ­o­my ethos that ani­mates every­thing from Uber to Airbnb.

Also like those ser­vices, what’s being trad­ed isn’t the good­will of strangers, but real mon­ey. In that con­text, the scalar con­cerns that come with micro­grids’ promise seem almost self-evi­dent: If util­i­ties allow them and there’s a local appetite for it, com­mu­ni­ties that can afford to cre­ate a micro­grid will. For oth­ers, the finan­cial bar­ri­ers to such a dras­tic tran­si­tion may well prove too high, espe­cial­ly in more rur­al areas with already aged infra­struc­ture. That’s where util­i­ties can come in.

Maybe they use their staff to help con­struct the project…maybe they help finance the sys­tem, or build the cir­cuit­ry,” Far­rell says. There are a lot of ways that util­i­ties could pro­vide their exper­tise that are dif­fer­ent rom sim­ply being the sole provider of elec­tric­i­ty.” Crit­i­cal­ly, big util­i­ties could help lev­el the play­ing field to help more com­mu­ni­ties access clean, reli­able and storm-resilient power.

When it comes to investor-owned util­i­ties, the issue isn’t whether the tech­nol­o­gy for such trans­for­ma­tions is avail­able, but whether there are prof­its to be made. For poor neigh­bor­hoods, that may not always be the case. This means that even an earnest embrace of renew­ables and more dis­trib­uted forms of ener­gy gen­er­a­tion could splin­ter uneven­ly — leav­ing more well-off ratepay­ers with state-of-the-art, clean-run­ning pow­er that can oper­ate dur­ing a storm — and every­one else reliant on out­mod­ed fuel and infrastructure.

The dilem­mas fac­ing micro­grids are those fac­ing renew­ables more gen­er­al­ly. While the recent growth of micro­grids has been excit­ing, a mas­sive invest­ment in both research and devel­op­ment — and actu­al con­struc­tion — is need­ed to bring such sys­tems to scale. There’s also no fed­er­al plan for what the tran­si­tion away from fos­sil fuels could look like. The fed­er­al gov­ern­ment and sev­er­al state gov­ern­ments — Florida’s includ­ed — seem com­mit­ted to mak­ing sure that tran­si­tion nev­er hap­pens. And even if there is polit­i­cal will to get off of fos­sil fuels, how that tran­si­tion is car­ried out could make the dif­fer­ence between a cli­mate-changed future — rife with inequal­i­ties — and one that pre­serves every oth­er form of inequal­i­ty that’s baked into our cur­rent econ­o­my, only with more solar pan­els and wind tur­bines. Whether com­pa­nies are inter­est­ed in devel­op­ing micro­grids is a dif­fer­ent ques­tion from whether they’ll help ensure every­one can access them.

As Hur­ri­cane Kat­ri­na showed, cor­po­ra­tions and cor­po­rate-friend­ly gov­ern­ments are more than will­ing to swoop in after a major dis­as­ter to pull pub­lic goods into the pri­vate sec­tor. In Texas, Hous­ton has already appoint­ed a for­mer Shell CEO to head its post-Har­vey recov­ery operation.

The ques­tion Irma pos­es is whether the oppo­site can hap­pen. If util­i­ties like FPL aren’t will­ing to make the kinds of invest­ments need­ed to save lives when the worst hap­pens, what alter­na­tives can take their place? And what does the fight look like to beat them polit­i­cal­ly? As the cli­mate cri­sis accel­er­ates, Amer­i­cans will face a fight over their pow­er in more ways than one — espe­cial­ly just after a dis­as­ter strikes.

Kate Aronoff is a Brook­lyn-based jour­nal­ist cov­er­ing cli­mate and U.S. pol­i­tics, and a con­tribut­ing writer at The Inter­cept. Fol­low her on Twit­ter @katearonoff.
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