February 23, 2005—In the wake of one of the most punishing hurricane seasons on record, a report from the Edison Electric Institute says recovery from storms must be speedy and controlled, and that utilities must work with regulators in the future to ensure that cost recovery mechanisms are in place before storms hit.
The new study, After the Disaster: Utility Restoration Cost Recovery, outlines steps it encourages electric utilities and state regulators to consider in establishing concrete, stable mechanisms to plan for and mitigate the massive cost of rebuilding electric systems following a major weather event.
After a powerful hurricane, ice storm or other severe weather event damages their electric systems, utilities launch massive, round-the-clock restoration efforts to restore power as quickly as possible. To help defray costs, many companies employ self-insurance mechanisms or storm reserves to reduce the burden shouldered by customers and shareholders.
However these reserves can be exhausted, as was the case for many of the utilities serving areas impacted by last years series of hurricanes.
To see the study, go to the EEI Web site.
