US Utilities Plan Critical Transmission Equipment Service Company

Eight US electric utilities and energy companies want to ensure availability of long lead-time critical equipment.
Published: Wed 17 Jun 2015

Grid resiliency and speedy restoration of power following an outage is not only about locating the fault but also about access to any equipment that might be required for repairs.

Response to major events

With concerns about being able to respond to major new threats such as physical attacks, electromagnetic pulses, solar storms, cyberattacks, earthquakes or severe weather events, eight US utilities and energy companies have proposed a plan to establish a critical transmission equipment service company.

Named Grid Assurance, it is proposed as a limited liability company that will give transmission-owning entities access to domestically warehoused long lead-time critical equipment, including large transformers, circuit breakers and other specialized electrical equipment.

The eight companies are American Electric Power, Berkshire Hathaway Energy, Duke Energy, Edison International, Eversource Energy, Exelon, Great Plains Energy and Southern Company.

Cost-based fees for subscribers

As proposed, Grid Assurance will own and provide subscribers with timely access to an inventory of emergency spare transmission equipment that can otherwise take months to acquire.

Equipment will be owned and maintained by Grid Assurance at secure, strategically located warehouses. In addition Grid Assurance expects to offer additional logistics support to expedite transportation of equipment to impacted sites.

Grid Assurance has filed a petition with the Federal Energy Regulatory Commission (FERC) seeking confirmation that this service can be part of a transmission-owning entity’s strategy to effectively address grid resiliency mandates. Grid Assurance plans to charge cost-based subscription fees, similar to FERC-regulated transmission formula rates. Cost-based subscription fees are expected to facilitate subscribers’ ability to recover expenses.

As proposed, Grid Assurance is expected to be more cost-effective than companies independently securing emergency spare equipment for high-impact, low-frequency events due to economies of scale through pooling of assets, diversification and pre-planned logistics.

Complement to existing programmes

Grid Assurance is seen as complementing the existing programmes of transmission owners, as well as industry initiatives such as the Spare Transformer Equipment Program (STEP) coordinated through the Edison Electric Institute, to enhance access to spare transformers and other equipment in the event of a terrorist attack. STEP currently has 54 member utilities in the US and Canada.

Under STEP, participating utilities are required to maintain and, if necessary, acquire a specific number of transformers, which are available for sale to other participating utilities that suffer an attack destroying or disabling one or more substations and requiring the president to declare a national emergency. (No such act has yet taken place since the inception of STEP in 2006.)

Contingent on regulatory approvals, Grid Assurance is expected to begin accepting subscribers and identifying inventory in 2016.