Keeping the Lights on During Superstorm Sandy: Climate Change Adaptation and the Resiliency Benefits of Distributed Generation
65 Pages Posted: 28 Oct 2020
Date Written: 2015
Hurricane Sandy (ultimately downgraded to "Superstorm" Sandy by the time it hit the coasts of New York and New Jersey in late October 2012) was the most lethal and destructive hurricane in 2012, resulting in 285 deaths, $68 billion in damages, and 8.5 million utility customers in the eastern United States losing power. Superstorm Sandy provided a wake-up call for electric utilities on the need to adopt a different set of long-term planning tools to improve the resilience of the electric system against anticipated extreme weather events. The experience of Superstorm Sandy provides a case study of the system resiliency benefits of distributed generation (DG) resources and microgrids, and valuable lessons that can be learned as utilities plan for increasingly frequent extreme weather events of the future. This Article examines legal and regulatory tools available to encourage electric utilities to move in the direction of a DG-based model, and it focuses in particular on the Consolidated Edison Company of New York (Con Edison) rate proceeding in New York. In that recently concluded proceeding, utility regulators had an opportunity to consider a "traditional" approach proposed by the utility-featuring transmission and distribution infrastructure investments-alongside a competing view of a "utility of the future" offered by environmental parties, geared toward a more resilient system that integrates DG resources and microgrids. In a precedent-setting order issued by the New York State Public Service Commission (PSC) on February 21, 2014, the PSC required Con Edison to make significant investments "to enhance system reliability, to achieve a higher level of storm hardening and resiliency in the face of anticipated climate change and sea level rise." Con Edison was directed to take specific steps to use DG resources as an alternative to traditional infrastructure, to facilitate DG installations in its service territory, and to develop an implementation plan for microgrids in its service territory. More broadly, utilities in New York were directed to integrate predicted impacts from climate change into their long-term system planning processes. The article also examines other legal theories that can be used in utility regulatory proceedings to move utilities toward a new utility paradigm that features DG resources, including the prudent investment standard, the doctrine of "used and useful," and the requirement to set "cost-based" rates.
Keywords: Hurricane Sandy, Superstorm Sandy, electric utilities, resiliency, distributed generation, regulation, Con Edison, ConEd, New York State Public Service Commission, climate change
JEL Classification: K23, K32
Suggested Citation: Suggested Citation