New Jersey Officials Examine the Costs and Benefits of Storm Preparedness

As the process of assessing the scope of damages from Superstorm Sandy moves forward, one of the confounding issues for policymakers and emergency responders is the sheer level of uncertainty inherent in even the best-informed efforts to safeguard critical infrastructure from damages.

Consider the experience of utilities in New Jersey, who in the days leading up to Sandy’s direct hit on the state drew on their experiences gleaned during the recovery effort from Tropical Storm Irene last year, which flooded 14 power switching stations that lead to widespread outages. The utilities tried to head off damages to the power system by sandbagging the same stations that had flooded during Irene. The problem was that Sandy’s path took an entirely different trajectory in New Jersey, and while flooding was far more widespread than during Irene, with 49 switching stations under water, only three of those that had been submerged during Irene also flooded this time around.

“Unfortunately, we sandbagged the wrong switching stations,” said Ralph LaRossa, president and chief operating officer of PSE&G, testifying before the New Jersey Senate Budget and Appropriations Committee in Trenton on Wednesday.

While the damages wrought by Tropical Storm Irene had been driven by heavy rainfall, Sandy’s destruction was propelled largely by two different factors: fierce winds that reached 90 miles per hour in some locations, and a tidal surge in Newark Bay of up to 14 feet, which was far higher and came onshore much faster than had been anticipated.

“Once it hit, it hit us in a way that we just did not expect,” said LaRossa.

He estimated the cost of restoring power to the 1.7 million customers in the utility’s service area at  between $250 million and $300 million.

Switching stations provide power to substations, which in turn deliver electricity to power lines that run along streets and serve homes and businesses. Hence, getting them up and running is critical before power can be restored throughout the system.

LaRossa said that many of the switching stations in New Jersey are particularly vulnerable to the type of tidal surge produced by Sandy because they are built in low-lying areas. At the time of their construction, often as far back as a century ago, the general practice was to locate them in industrial areas close to areas of major demand, or load, which at the time was concentrated principally along the area’s thriving ports.

“Times have changed, and we need to build redundancy into the system,” said LaRossa.

LaRossa said one of his biggest concerns now is that the system is weakened. The saltwater that flooded switching stations and substations can have a corrosive effect on equipment, and added to that is the impact of a 350,000-gallon spill of diesel fuel into Newark Bay during the storm, which also affected equipment. “It’s like dropping a transistor radio in a puddle on the beach. You wipe it up, it works for a while, and at some point it’s going to fail you,” he said.

The hearing in Trenton is part of a series of meetings that policymakers in the state have called to assess the damages and consider measures to help mitigate the impacts of so-called 100-year storms that are now arriving with frightening regularity.

While policymakers welcomed LaRossa’s call for building redundancy into the system, there is still much uncertainty about what form it should take. Should there be extra switching stations and substations built along higher ground; should more wires be buried underground to avoid damages from trees pummeled by high winds; and most importantly, how much will it all cost, and who should pay?

On average, it costs $100 million to rebuild a switching station and $2 million to build a substation, said LaRossa.  He said that PSE&G could access capital markets for investment funds, but that first, state officials needed to establish a clear policy regarding what type of safeguards should be required for the future.

“We need to decide what level we are building to — a category 2, 3, 4 [hurricane]? We need to answer that question first, and then I can give you the long-term cost estimate,” he said.

While those questions have yet to be resolved, New Jersey Board of Public Utilities (BPU) President Robert M. Hanna said that it was incumbent upon his agency to work with the legislature to plan and prepare for the absolute worst.

Hanna agreed that redundancy should be built into the system, and noted that the Federal Energy Regulatory Commission had already approved some $3 million in transmission upgrades in New Jersey, which should help improve reliability going forward. The BPU is also working with the Edgar J. Bloustein School of Public Policy at Rutgers University to provide a cost-benefit analysis of the options available to better protect the power system during a severe weather event.

The assessment is looking at the possibility of putting wires underground, though costs are prohibitive in a state like New Jersey, with infrastructure that was designed decades ago. “Every street in New Jersey would have to be dug up,” said Hanna.

The group has been examining studies performed by other states and municipalities on the feasibility of undergrounding wires, including one from the District of Columbia. “The expense they came up with shocked me,” said Hanna.

LaRossa pointed out that while burying wires protects them against damages from high winds, they can be defenseless in the case of a flood. Underground wires were no match for the tidal surge that flooded Liberty State Park, which sits along the Jersey City waterfront, he said. Policymakers should consider placing some above-ground cables in such places, he added.

“It may sound crazy, but we need to have some redundancy built in,” said LaRossa.

Hanna said that the BPU and Rutgers is also examining measures taken by Gulf Coast states following Hurricane Katrina to protect switching stations and substations from flooding. So far, he said, the information suggests that building a wall around a substation is cheaper than moving or elevating it. The task force is also looking at Smart Grid applications, though Hanna noted that while some options being debated, like smart meters, are excellent at pinpointing where outages occur, they will be of little help in a storm in which 90% of the power system is down.

Nevertheless, LaRossa said the state needs to consider smart meters, which have already been installed for 43 million customers in other service areas nationwide, but whose use has lagged far behind in New Jersey. He and other utility executives estimated the cost of installing the meters across New Jersey would to total around $1 billion.

But New Jersey Ratepayer Advocate Stefanie Brand said those estimates cover only the cost of the actual meters and do not include the profit the utilities will charge for their use or the expense of removing the old meters.

“Smart meters kind of stick in our craw,” Brand told the committee. “What do we get for that one billion? If the power goes out, it tells the utility it’s gone out. When the power goes back on, it tells the utilities it’s gone back on. To me, if we have a billion dollars to spend, I’m not sure that’s the best way to spend it.”

One logical preventative measure, said Brand and others, is the need to simply trim more trees that hover over exposed wires. But the question of responsibility is complex in New Jersey, where utilities only have the authority to trim trees along their designated rights of way, which is essentially the vertical space below and above utility wires. If the roots of a tree reach outside of that space, the utility does not have the authority to touch it. Jurisdiction reverts to towns and municipalities, some of which have been reluctant to trim or remove tall trees that provide shade and character for a community.

During the hearing, state officials uniformly faulted utilities for the lack of straightforward communication with the public. Many residents and businesses experienced power outages for up to two weeks but received confusing and often contradictory messages from utility call centers about when power would be restored. Insufficient communication was a weakness during Tropical Storm Irene, which produced prolonged power outages across the state.

LaRossa told the committee that PSE&G had taken to heart the lessons learned during Irene and held daily phone calls with mayors and with representatives of the media. Its outreach included sending employees to meet face-to-face with local officials to keep them apprised of restoration efforts. The company also produced updates via Twitter, and now has 50,000 followers. LaRossa admitted, though, that the utility had lagged in its efforts to incorporate more effective technical options into its system for better communicating with the public.

But Hanna gave the utilities a grade of F for their communications performance, insisting that PSE&G and others simply are not working hard enough to improve their outreach. “We have plenty of ways to communicate information to the public. That is not the problem. The problem is the utilities are not generating the information in a way that is going to be useful to the public,” he said.

The BPU has formed a task force to take a “deep dive” into the communications systems being used by the utilities. Among other things, the process will assess how much information is being provided at each state of the restoration process during a power outage. Hanna said he hopes to be able to create an automated system to enable utilities to generate restoration updates in real time and make that information directly available to the public.

Legislators have requested that Hanna meet with them to relay the findings of the Rutgers study once it is complete. The Senate Budget and Appropriations Committee has several more hearings scheduled on the Sandy recovery effort in the coming weeks.

— By Rona Cohen