Regulatory blind spot at the Public Utilities Commission

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Last June, over half of a million Minnesota residents lost power after a storm swept through the state. Many went days without electricity. Yet this outage, along with many others caused by major weather events across the state will be nearly ignored as the Public Utilities Commission (PUC) reviews the reliability of Minnesota’s investor-owned utilities electric service.

As part of its duties, the PUC reviews energy resource planning and approves rate increases when necessary to ensure that service now and in the future is reliable and safe. At the heart of this exercise are annual safety, reliability, and service quality performance reports filed by each investor-owned utility as required by State statute.

These reports are actually quite simple, centered on three statistics: the System Average Interruption Duration Index (SAIDI), System Average Interruption Frequency Index (SAIFI), and Customer Average Interruption Duration Index (CAIDI). SAIDI, SAIFI, and CAIDI are important statistics as they measure how long outages last, how often outages occur, and how long it takes to get the power back on.

At first glance, this seems a completely reasonable way to assess reliability. But digging into the annual reports filed by the investor-owned utilities in Minnesota, there’s a hitch – these statistics are “smoothed” using a statistical method to remove abnormal interruptions. Essentially, this method uses historical operation data to identify abnormal or “major event days” for the year, generally caused by storms or natural disasters, where power is interrupted for an unusual amount of time and/or for a large number of customers. These days are removed from the reliability statistics calculations to better identify how reliability is trending under normal or average conditions.

This is a useful way to understand day-to-day reliability, but it also reveals a potential blind spot – adaptation. Weather related power outages are estimated to cost the U.S. between $18 and $33 billion annually. The June storms alone were projected to cost about $17.8 million in just infrastructure damage across Minnesota. With an expected increase in storms and heavy precipitation with climate change, why are we smoothing out these events when assessing reliability?

It is important to note that the reviews conducted by the PUC are not the only assessments of reliability. For example, utilities develop long term resource plans and monitor their own infrastructure, and the Midcontinent Interconnection System Operator (MISO), the grid operator, is held to relability standards set by the North American Electric Reliability Corporation.

That said, we’re entering a new climate era, and using historical data as a baseline and ignoring weather events that are predicted to increase closes the door on discussions about how utilities need to adapt to changing conditions. Moreover, it opens Minnesotans up to more costly outages all while the utilities can, in theory, meet their reliability goals.