Rod West, Entergy Corp.'s chief administrative officer, stood before a packed convention hall in New Orleans during ELECTRIC POWER 2014 and told the audience that the odds of extreme weather are increasing, and that the discussion for prudent utilities should not be about whether or not climate change is occurring but how to mitigate and manage growing risk due to more frequent extreme weather.
West urged the industry to set aside the emotions that surround the notion of climate change and instead plan as any prudent utility would do that is intent on mitigating its risk. Doing so means that the entire electrical system can benefit from increased resiliency.
He focused most of his comments on a region that he called the "energy coast," which includes an arcing swath of land 70 miles wide that stretches from Port Arthur, Texas, to the Florida Panhandle. Assets within that geographic area include some $205 billion invested in chemical plants, $107 billion in refineries, and $60 billion in pipelines. Altogether, some $2 trillion worth of assets—everything from houses to office buildings to shopping centers—reside in the region. West said the total value of energy coast assets is expected to grow to $3 trillion by 2030.
But a combination of rising sea levels and wetlands loss (on the order of 25 square miles each year in southern Louisiana alone) means that the Gulf of Mexico is moving closer to population centers and threatening energy assets critical to the region's economy and the country's.
Those are not the only threats, however, he said. A much larger risk than hurricanes is the increased number of severe thunderstorms and wind events that Entergy has tracked for years. As a result of these factors, weather-related losses that amounted to around $5 billion in 2010 could grow to between $19-23 billion by 2030. West said that Hurricane Sandy in late 2012 demonstrated that extreme weather events are not isolated to the Gulf Coast region.
"This is not about regionalism," he said. The challenge for utilities nationwide is to "prepare, harden, and engage" the public and other stakeholders. The last part—engagement—may be the toughest to achieve, he said. For example, a utility may invest millions, if not billions, of dollars to protect generating assets, substations, and other critical assets. But if its customers don't make similar investments to bolster their resiliency, then the wider economy remains vulnerable to an extreme weather event.
"None of this is cheap," West said, "but the cost of inaction is far more."
By framing the issue in terms that are familiar to utility professionals everywhere—prudency, risk mitigation, and resiliency—West removed much of the emotion around extreme weather. He laid out a reasonable and responsible approach that other utilities should consider.
–David Wagman, Content Director, ELECTRIC POWER
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