Regulation of Public Utilities in the Face of Disasters
description
Transcript of Regulation of Public Utilities in the Face of Disasters
![Page 1: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/1.jpg)
Regulation of Public Utilities in the Face of Disasters
Thomas PearceChair, NARUC Staff Subcommittee on Critical Infrastructure
Senior Utility Specialist, Public Utilities Commission of Ohio
7 July 2011
Workshop: Risk Management and Economic Regulation
for Water and Sanitation Utilities
Bogotá, Columbia
![Page 2: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/2.jpg)
DISCLAIMER
• Nothing contained within this presentation shall be deemed to represent any positions or views of the National Association of Regulatory Utility Commissioners (NARUC), its officers, its staff, its Committees, its Subcommittees, any or all of its individual member commissions, the state of Ohio, its governor, the Public Utilities Commission of Ohio, its commissioners, its staff, nor even those of the author…1
1 Remainder of the legal disclaimer: if you’re paying attention, that last item was injected for purposes of humor; it’s okay to laugh and to take neither the presenter nor the presentation too seriously
![Page 3: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/3.jpg)
The future dependson what we doin the present.
Mahatma Gandhi3
![Page 4: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/4.jpg)
Critical Infrastructure and the
Role of Public Utilities Commissions
![Page 5: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/5.jpg)
Emergency Managers
Surrounding Nations/ States
National, State & Local Police; Military
Local Government
Public Health Agencies
Public UtilitiesComission
Utilities & Interdependent Systems
Other National Governmental Agencies
Executive Office/President/Governor
Governmental Response in Emergencies
![Page 6: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/6.jpg)
Public Utilities Commission Responsibilities in the U.S.
• Ensure adequate reliability and emergency
planning by regulated utilities
• Manage interdependencies
• Optimize planning through utilities facility
siting process
• Approve cost recovery for infrastructure
investments.
6
![Page 7: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/7.jpg)
Issues
• Measuring infrastructure reliability
• Prioritizing spending
• Maintaining affordability yet justifying costs
• Benefits of enhanced system redundancy
• Improving the safety of operations
• Establishing performance goals for utility
![Page 8: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/8.jpg)
Threats to the System and
Emergency Preparedness
![Page 9: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/9.jpg)
From Response/Recovery to Utility System Reliability/Resiliency:
•Continuity of Operations Plans•System Redundancy•No choke points•Diversity
Plan not only for predictable events, but low probably/high consequence events.
How to integrate these modes of thinking into operations?
Paradigm Shift
![Page 10: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/10.jpg)
The Five Phases of an Emergency
Phase III Assess and
decide action
Phase I Planning
Phase IV Take actions and respond
to feedback
Phase V
Review lessons learned
Phase II Monitor and
alert
Who is involved and who leads at each stage?
What specific actions are taken at each stage?
![Page 11: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/11.jpg)
RECAP
• Know your network: identify critical infrastructure and key assets
• Assess risk, vulnerabilities, criticality & nature of threat
• Identify Protective Measures
• Build partnerships with public/private sectors, federal, state, local and adjacent governments
![Page 12: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/12.jpg)
Utility Emergency Preparedness
&Utility Assurance
Guidelines
![Page 13: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/13.jpg)
What is Utility Assurance?
All Hazards Approach:
• People – Sabotage, Terrorism, Civil Disturbance, Public Health Emergencies
• Nature – Flooding, Hurricanes, Tornados, Earthquakes, Ice Storms and others
• Technological failures – Cybersecurity, Failure of Other Infrastructure
13
![Page 14: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/14.jpg)
![Page 15: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/15.jpg)
Effects of A “Dry” Hurricane
![Page 16: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/16.jpg)
16
PlanningTraining/Exercises
Coordination
AssessmentScope and Duration
MitigationRisk & Vulnerability
Assessment
Security• Physical• Insider• Cyber
Reliability• Redundancy• No choke points• Diversity
2. Preparedness for Emergency Response
1. Protecting Critical Infrastructure
![Page 17: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/17.jpg)
Ten Actions to Assure Emergency Preparedness
1. Ensure you & your staff are prepared & trained to deal with the emergency situation
2. Know your utility infrastructure and profile
3. Know key government & industry contacts
4. Maintain current file of legal authorities
5. Remember infrastructure locations & keep them current
17
![Page 18: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/18.jpg)
Ten Actions to Assure Emergency Preparedness (cont.)
6. Be familiar with response measures
7. Work with the private (or public) sector
8. Review & update plans regularly
9. Develop standard operating procedures for access or credentialing
10.Prepare a media plan
18
![Page 19: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/19.jpg)
Emergency Response Plan
“WHAT’S IN YOUR PLAN?”19
![Page 20: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/20.jpg)
Communicating Interdependencies
In an emergency,–what you know is only as
important as
–who you tell.
![Page 21: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/21.jpg)
Communicating with the Public
• Be prepared – know who will to talk to the press
• Provide a clear and consistent message
• Facts (always) versus speculation (never)
• Provide authoritative, accurate and timely information
• Provide background information that helps them understand the nature of the problem
21
![Page 22: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/22.jpg)
Responsibilities In An Emergency
Public Utilities Commission• monitor for outages & emergencies• e.g.: equipment failure, utility response issues
(access to affected areas, etc.)• make recommendations to the Governor
• *facilitate governmental response coordination
Utilities• institute “Emergency Procedures”• know priority customers• coordinate with other utilities• restoration, reports 22
![Page 23: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/23.jpg)
Cyber Security
• What are we trying to protect?
• What are the threats?
• What are the challenges of instituting cyber security?
• Where are the vulnerabilities?
![Page 24: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/24.jpg)
Summary Observations: Regulatory Roles & Responsibilities For Critical
Infrastructure Protection
• Participate in emergency planning
• Ask utilities key questions about their infrastructure
• Protect sensitive information
• Designate an information point-of-contact
• Keep updated emergency contact lists
• Recognize interdependencies
• Coordinate and communicate regionally & internationally
![Page 25: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/25.jpg)
Interdependencies
![Page 26: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/26.jpg)
What are interdependencies?• The functional reliance of an essential
service (e.g., networked utility service) on another network/system
• Disruption/outage in one area/sector has implications beyond that area/sector, and vice versa
What interdependencies exist among your utility systems?
How can a domino effect be avoided?
![Page 27: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/27.jpg)
![Page 28: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/28.jpg)
What are some types of interdependencies?
• Types:– Physical– Cyber– Geographical– Institutional
• Infrastructure integrity – interdependency is intimately related to security and reliability
![Page 29: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/29.jpg)
![Page 30: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/30.jpg)
Regional and International Coordination
![Page 31: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/31.jpg)
Why is coordination important?
• Utility services are typically provided by network industries (scale economies & large service territories)
• Utility regions may be international
• Regional and international governance issues
• Lack of coordination and communication undermine reliability and security
32
![Page 32: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/32.jpg)
Cost Recovery
![Page 33: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/33.jpg)
34
Cost Recovery and Prudence of Investment Decisions
Utilities need to exercise due diligence to protect the investments of their shareholders and assure a reliable supply to customers.
Who has a specific role in domestic security and critical infrastructure protection?
Who has a role in the recovery of the costs of utility investments?
![Page 34: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/34.jpg)
Cost Recovery
• Who pays?– Stockholder
– Customer
– Federal, State, Local Government
• How do we pay?– Lower return
– Higher rates
– Securities (bonds)
– Increased tax liability
– Increased efficiency
35
![Page 35: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/35.jpg)
How are costs recovered?
• Regulatory Agencies implement protocols to determine whether a utility may recover money
• Most cost recovery is done through rate cases
• Cost recovery is implemented through rate adjustments
36
![Page 36: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/36.jpg)
Reliability Standards:
Some Related Approaches
![Page 37: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/37.jpg)
Distribution Quality:
(1) What is to be measured?
(2) What are the indicators?
• MEASUREMENT = the reliability of
each distribution system
• INDICATORS = Service reliability
indices to be matched against
performance targets.
![Page 38: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/38.jpg)
“Reliability” is defined by
1. Adequacy The ability of a utility system to supply the aggregate
demand and customer requirements at all times
2. Security The ability of the utility system to withstand sudden
disturbances such as unanticipated loss of system elements or power supply disruptions
![Page 39: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/39.jpg)
EXAMPLE MEASURES
• Number of service interruptions
• Duration of service interruptions
• Call center response
• Cost thresholds
![Page 40: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/40.jpg)
In the USA, certain measurements are used to determine how well a utility
system is performing
1.CAIDI (customer interruptions)
2.CAIFI (the frequency of customer interruptions)
3.SAIDI (system interruptions) and
4.SAIFI (the frequency of system interruptions)
The measurement of how well a system is performing provides an indicator of “reliability.”
![Page 41: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/41.jpg)
CAIDI
• CAIDI (measurement) - The customer average interruption duration index, represents the average interruption duration or average time to restore service per interrupted customer.
• CAIDI (percentage indicator) is expressed by:
Sum of customer interruption durations ÷ number of interruptions
![Page 42: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/42.jpg)
CAIFI
• CAIFI (measurement) is the customer average interruption frequency index, represents the average number of customers interrupted
• CAIFI (percentage indicator) is expressed by:
Sum of customer interruptions ÷ number of customers who had at least 1 interruption
![Page 43: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/43.jpg)
SAIDI
• SAIDI (measurement) is the system average interruption duration index, represents the average time each customer is interrupted.
• SAIDI (percentage indicator) is expressed by:
Sum of customer interruption durations ÷ number of customers
![Page 44: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/44.jpg)
SAIFI
• SAIFI (measurement) is the system average interruption frequency index, represents the average number of interruptions per customer.
• SAIFI (percentage indicator) is expressed by:
Sum of customer interruptions ÷ number of customers
![Page 45: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/45.jpg)
How To Use Measurements and Indicators
• Performance targets are determined for each utility as a basis for service reliability indicator
• Performance targets (next succeeding calendar year) revised as system performance patterns become more recognizable
• Performance targets should reflect historical system performance, system design, service area geography, and other relevant factors
![Page 46: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/46.jpg)
Recognition of system performance aids in targeting maintenance and system
improvements
• Annual performance levels for each service reliability indicator during a major weather event such as a storm should be recorded and reported for future use
• Performance data during a “major storm”, or other uncontrollable interruption of service can be used by the operator to develop an emergency plan
![Page 47: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/47.jpg)
Recognition of system performance aids in targeting maintenance and system
improvements
• If the annual performance level is worse than the target for any indicator, the operator can develop an action plan to improve performance to a level that meets or exceeds the target level for each missed reliability indicator
![Page 48: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/48.jpg)
KEY INGREDIENTS
• Performance targets must be achievable
• Utilities AND Stakeholders set goals
• Utility has discretion in how to get there
• Observable and verifiable
• The measures actually reflect utility performance and efforts
![Page 49: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/49.jpg)
IMPLEMENTATION ISSUES
Start too high=>no room for improvement or only at extremely high costs
Start too low=>easy improvements, high reward with little or no effort
Look for needed improvements
![Page 50: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/50.jpg)
Role of Standards
• Standards important because:– Pipeline assets fail at different rates
– Some newer generation pipes fail sooner than earlier vintage pipes
– Spending money to reduce average age of infrastructure not necessarily most cost-effective measure to address
![Page 51: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/51.jpg)
Role of Standards - continued
• Standards important because :– Quantify types of breaking mains and #
customers served– Can result in economic waste and failure
to substantially improve service to address
– According to AWWA, many late 1800s cast iron pipes still functioning well
![Page 52: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/52.jpg)
Achieving Optimal Infrastructure Performance
• Is difficult • Optimization process• Understand water infrastructure failure
causes• Define acceptable level of rate of failure• Evaluating costs of reducing threat risk• Refine through continuous improvement
process• Begin then develop and refine as you
proceed
![Page 53: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/53.jpg)
Achieving Optimal Infrastructure Performance - continued
• Set reliability goals which quantity
– Risk of failure
– Value of reliability
• Example: critical care facilities usually have backup power, but don’t have backup water supply facilities
• Lesson: you need different reliability standards for different customers
![Page 54: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/54.jpg)
APPLICABILITY TO WATER UTILITIES
![Page 55: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/55.jpg)
US water systems
– Some reliability goals or standards for water supply sources
– But not for entire water systems
![Page 56: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/56.jpg)
Issues • Main breaks
– Main break history (frequency, repair costs)– Outage impact history: Duration; Customer impact (#,
type, need for extraordinary flushing, disinfection, complaints)
• Material integrity– Undesirable material– Known corrosion (internal, external)– Known problems by batch, vintage or manufacturer
![Page 57: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/57.jpg)
Issues • Pipe age/useful life
– Approaching/exceeding expected useful life– Range of expected useful life– Material – cast iron, cement, steel, ductile iron– Installation
• Location• Conditions• Date/age
– Pressure or other factors known to affect useful life
![Page 58: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/58.jpg)
Issues
• Critical system impact– Transmission or other large-diameter main– Potential failure impact on customers (#, type,
nature & magnitude of failure impact)• Impact on priority customers (schools,
critical care facilities, significant commercial/industrial/military)
– Valve operation/location issues
![Page 59: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/59.jpg)
Issues
• Water quality issues– Customer complaints– More frequent flushing needs– Utilizing bleeders for quality control– Pipe material contributing to water quality
problems
• Leakage– Losses due to system integrity– Losses due to theft of service
![Page 60: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/60.jpg)
Issues
• Hydraulic capacity– Does not meet system hydraulic needs– Customer complaints or operational issues related to
flow and/or pressure– Hydrants on mains less than desired diameter– Fire flow adequacy
![Page 61: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/61.jpg)
Issues
• Scheduled work coordination– State or locality other government project– Required government agency relocations– Potential for restoration/paving savingd due to third
party work
• Other (specified by utility provider)– Unique customer or community considerations– Other mitigating or unanticipated factors or conditions
![Page 62: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/62.jpg)
New Orleans, September 2005
![Page 63: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/63.jpg)
Hope for the best, plan for the worst, and you should
always find yourself prepared.
64
![Page 64: Regulation of Public Utilities in the Face of Disasters](https://reader035.fdocuments.us/reader035/viewer/2022062321/56813c8c550346895da6328d/html5/thumbnails/64.jpg)
Muchas Gracias!
Thomas PearceSenior Utility Specialist, Public Utilities Commission of Ohio
Chair, NARUC Staff Subcommittee on Critical Infrastructure
+1 614 4661846