Catastrophic Events Under Scrutiny
Todd Jirovec is a Dallas-based Principal with PwC Strategy& and has over twenty-five years of experience in strategy and operations consulting, particularly with electric and gas utilities, energy trading, and midstream gas companies. He currently leads the firm’s Power and Utilities strategy practice.
Hugh Le is a San Francisco-based Director with PwC Strategy& and has over ten years of experience in strategy and operations consulting. He has supported clients across utilities, power generation, renewable energy, and industrials. He leads engagements in asset and risk management, emergency planning and response, operating model design, capability maturity assessment, and risk-based investment planning.
Long before the COVID-19 pandemic, utilities faced an increasing number of catastrophic events. Hurricanes, storms, and wildfires still now increasingly grab headlines, with insured and uninsured losses increasingly setting records as well.
These incidents have the potential to cause massive disruptions to operations and customers, while attracting high levels of public and regulatory scrutiny. As the industry emerges from the initial onslaught of the COVID-19 crisis, it will likely need to address how it can ramp up its response to sudden, impactful events on the scale of a global pandemic or unusually catastrophic weather-related events. Toward this aim, regulators are requiring — and utilities are responding with — enhanced grid and pipeline resiliency programs to help fortify systems and reduce risk.
How risks are identified and mitigated are increasingly becoming part of the narrative to help justify investment plans going forward. Utilities are evolving their capital plans to speak in a new language that includes enhancement of operating and maintenance practices, system-hardening programs, and deployment of newer non-wires alternatives such as microgrids. As this transition unfolds, developing risk-informed investment plans should be required and be a part of the new normal that utilities face with these increasing risks.