Hurricane Irma to put $3 billion worth of power grid upgrades to test
New York/San Francisco: As Hurricane Irma bears down on Florida this weekend, the state’s utility customers will find out exactly what $3 billion worth of power-grid upgrades got them.
NextEra Energy Inc.’s Florida Power & Light Co. used that money in recent years to replace wooden poles with concrete ones, install flood monitors to protect low-lying substations, and deploy smart meters to help track power outages.
And it’s still forecasting a record blackout, with 9 million people projected to lose power — or more than 40% of the state’s population. Restoring service will take weeks should the company need to rebuild its system, not merely repair it, Eric Silagy, Florida Power & Light’s chief executive officer, said on Friday.
“These are the kinds of winds that can snap a concrete pole,” Silagy said. “We have the strongest, most highly engineered, smartest grid in the US but there is no way to engineer against a storm of this kind of magnitude. Even underground facilities are going to be subject to outages because of flooding and storm surge.”
Expectations will be high after the company spent $3 billion in ratepayer funds since 2006 on shoring up the grid, said Kit Konolige, a Bloomberg Intelligence analyst based in New York. That followed Hurricane Wilma in 2005 which knocked out power to 3.5 million customers.
NextEra was the second worst performer in the S&P 500 Utilities Index on Friday, falling 0.8% to close at $148.26 in New York. It had fallen as much as 1.6% earlier in the day, the biggest decline since April.
Investors may have gotten “a little nervous” about the latest storm track, which showed Irma making a solid hit in the middle of the utility’s territory, Konolige said. While utilities typically are allowed to bill customers for the costs of storm-related repairs, there is no guarantee they’ll gain approval for those expenses, especially if they’re high, he said.
Florida Power & Light has about 13,500 repair workers standing ready.
“Our goal is to get as many customers up and running as soon as possible,” the company said in a statement Friday. With better information and crews in position, damage can be assessed and repaired quicker than before, Silagy said.
Duke Energy Corp. expects more than 1 million outages, with efforts to restore power taking as long as a week or more. The company, which is mobilizing more than 7,000 staff to help get the lights back on, finished on Friday up 0.5%. Bloomberg