Report 2021-2022 Energy Security State Legislative Review: Disaster Planning and Ensuring Reliable Service

Extreme Weather Impacts on Energy System Reliability

Hurricanes: The United States’ Gulf Coast

Hurricanes and similar storm systems can have major impacts on energy infrastructure, including flooding of substations or other energy facilities and destruction of electric transmission and distribution infrastructure from high winds.

In August 2021, Hurricane Ida made landfall in Louisiana, damaging or destroying much of the coastal region’s infrastructure before trailing north and wreaking havoc in Northeastern states. Ultimately, Hurricane Ida would go down as the costliest natural disaster globally in 2021, and the most devastating hurricane to hit Louisiana since Katrina in 2005. Notably, Hurricane Ida destroyed all of the high voltage transmission lines that provide power to New Orleans. In the immediate aftermath, over a dozen people along the Gulf Coast died of heat exhaustion due to the lack of power and air conditioning, according to NOAA’s report. Since then, the transmission infrastructure has been rebuilt to withstand higher winds and be more resilient to disasters.

Winter Storms: Texas

Winter storms and extreme cold conditions can create excess demand for natural gas and electric heating and can stress both fuel supplies and related infrastructure. In early 2021, Winter Storm Uri caused extreme cold weather across Texas. Conditions grew so severe that energy generation, transmission, and distribution resources – many of which were not winterized – were either damaged or forced offline. Long term costs for Texas utilities and ratepayers could total over $10 billion, while impacts in other nearby states could add billions more to the overall cost of this disaster. The storm and its severe disruption of the grid proved to be not only expensive for both utilities and consumers, but deadly in some cases. In total, the storm caused at least 246 deaths with over 160 due to extreme cold exposure.

After Winter Storm Uri, the Texas legislature took several actions to prevent similar future disruptions, introducing over 100 bills, including SB 1750 (enacted), which requires utilities to develop a winter preparedness emergency plan to ensure energy resources remain online in severe conditions. It also requires the state Railroad Commission to adopt new measures that gas pipeline facility operators must implement that will help maintain service during an extreme weather emergency.

Wildfires

Wildfires pose a significant threat to America’s energy system and its ability to reliably serve consumers; evidence suggests these threats will continue. In May 2022, Portland General Electric, Pacific Power and Idaho Power—three major utilities serving the Northwest—warned customers that “Fire-weather conditions, such as severe drought combined with summer windstorms, could lead to safety-related power outages” the rest of the year. This came after Oregon enacted SB 762 requiring utilities to have wildfire response plans in place in 2021.

Likewise, in mid-June 2022, Rocky Mountain Power warned customers in southern Utah of possible wildfire prevention-related shutoffs as the state experienced severe drought conditions and high wildfire risk. The day after the warning, two fires broke out farther north, one near Utah’s Great Salt Lake Park and another in western Salt Lake County. A month prior, Utah had enacted legislation creating a new Grid Resilience Committee to recommend grid infrastructure improvements to the legislature. Wildfires pose a significant threat to America’s energy system and its ability to reliably serve consumers, and state legislatures are leading the policy response.

Extreme Heat and Other Extreme Weather

During periods of extreme heat, heightened energy demand risks overwhelming generation and transmission capacity. In serious cases, utilities may de-energize parts of the grid or implement rolling blackouts to prevent grid damage.

The North American Electric Reliability Corporation (NERC) has predicted several regions are at risk of energy emergencies due to extreme heat, with utilities in several states asking customers to reduce power usage to avoid rolling blackouts. In response to capacity challenges, Indiana (HB 1520, enacted 2021) and North Dakota (SB 2313, enacted 2021) are among states in the region that have recently moved to ensure resource adequacy and grid reliability with new reporting and resource planning requirements.

More recently, in late August and early September, extreme heat conditions in Southern California spurred new warnings of potential rolling blackouts as increased demand for electricity to cool homes stressed the grid. California issued two “flex alerts” urging customers to reduce energy use during afternoon and evening hours to balance demand with supply. Perhaps recognizing the growing impacts of extreme heat on the grid, California considered AB 64 to promote energy storage deployment and enacted SB 533 to support distributed energy resources to ensure reliability and resource adequacy, particularly during periods of high demand.

How States are Tackling Energy Resilience Needs in Light of Increasing Hazards

Since 2021, states have considered bills designed to mitigate threats to electric reliability and reduce the overall vulnerability of the U.S. energy system.

Several pieces of legislation aim to assess the resilience of the grid and prepare for emergencies, such as natural disasters, often through reporting requirements or reliability assessments. As natural disasters increasingly threaten our communities and critical infrastructure, states across the country are moving to require utilities to make new investments or take other measures to improve grid resilience. A few states aim to encourage investments by allowing utilities to recover costs through customer rates or by providing public funding.

Other bills create new programs to help local communities and residents install microgrids and distributed energy resources or backup energy storage, thereby ensuring homes, businesses and critical facilities do not lose power in emergencies. Some of these bills focus on protecting utility infrastructure specifically from weather-related or similar disasters, while others deal with broader reliability of service issues and overall energy resilience.

Utility Resilience Assessments, Planning, and Reporting:

Energy resilience assessments and planning improvements can help guarantee that utilities and local communities are incorporating energy resilience into their planning and mitigation efforts. Ultimately, this can help set priorities and direct utility investments, and lead to a stronger grid that can stand up to multiple types of disasters and other hazards. Many states considered legislation this past session imposing new utility planning requirements, or additional monitoring and reporting for utilities to help improve energy resilience. While these bills represent a range of paths forward, there are some common threads. Since 2021, many bills aimed at energy resilience include requirements for utilities or utility regulators to formally assess the reliability of the electric grid. Several of these bills also require utilities to follow up on these assessments with detailed plans to improve resilience, focusing on issues ranging from demand and capacity constraints to specific climate and weather-related hazards.

California SB 884 (enacted 2022) would require the PUC to establish an expedited utility distribution infrastructure undergrounding program. The bill would require electrical corporations with at least 250,000 customers to submit a distribution infrastructure undergrounding plan to participate and seek additional funds for reduced projects costs. This legislation follows devastating wildfires around the state affecting, and sometimes caused by, transmission lines located in fire-prone areas.

Colorado SB 72 (enacted 2021) creates a new Colorado Electric Transmission Authority to coordinate efforts to ensure grid resilience, and supports transmission expansion by the state’s utilities to support participation in an RTO by 2030. Language in the legislation states that joining an RTO will help utilities improve grid resilience from natural and human-made hazards and allows cost recovery for investments the PUC finds will improve resilience.

Colorado HB 1249 (enacted 2022) requires the Colorado Energy Office to create a grid reliability and resilience roadmap for improving electric grids in the state, including details for how microgrids can be deployed to harden the grid, improve reliability, and ensure electricity can be delivered when extension of distribution infrastructure is impractical due to cost or technical obstacles.

Massachusetts SB 2156 (pending 2022) would require utilities to evaluate the reliability of their electrical distribution lines and provide a timeline to either the local municipality or the commonwealth on the repair and replacement of such lines to improve reliability.

New York SB 4824 (enacted 2021) requires electric corporations to submit to the PUC a climate change vulnerability study evaluating their infrastructure, design specifications, and procedures to better understand the corporation’s vulnerability to climate-driven risks, and shall include, but not be limited to, adaptation measures to address vulnerabilities. The study must be followed by a climate resilience plan that includes proposed storm hardening and resiliency measures over the next decade.

Utah HB 418 (enacted 2022) creates a Grid Resilience Committee in the Department of Emergency Management with several utility-sector members, which shall report recommendations to increase grid resilience and enhance critical infrastructure protection to the Public Utilities, Energy, and Technology Interim Committee.

Washington SB 5295 (enacted 2021) allows for the PUC to implement performance-based assessments, under which the PUC can consider service reliability in its decisions to approve or not approve multi-year rate plans.

Several states are now considering bills that require utilities and energy providers to plan for specific natural hazards like wildfires or earthquakes.

California SB 533 (enacted 2021) requires that an electrical corporation’s wildfire mitigation plan identify circuits that have frequently been deenergized to mitigate the risk of wildfire and include measures to reduce the need for, and impact of, future de-energization events.

Oregon SB 762 (enacted 2021) requires public and consumer-owned electric utilities to have and comply with a risk-based wildfire protection plan that is evaluated and approved by the PUC. The plan must be based on reasonable and prudent practices identified through workshops conducted by the PUC.

Oregon SB 1567 (enacted 2022) requires seismic vulnerability assessments for bulk oil facilities and fuel terminals located in certain counties subject to seismic risks. It also directs state agencies to develop rules to ensure fuel and oil system resilience in the face of major earthquakes and provides grant funding to help owners and operators make needed improvements to facilities.

Texas SB 1750 (enacted 2021), requires power generation companies, ERCOT-regulated utilities and other entities involved in supplying natural gas for electricity to develop a winter preparedness emergency plan to ensure energy resources remain online during winter storms. It also requires the Railroad Commission to adopt new rules for gas pipeline facility operators that will help maintain service in extreme weather.

A handful of bills were also introduced in 2021 and 2022 that would require utilities to report on various reliability metrics, including outages and capacity projections, to increase transparency around grid resilience.

Indiana HB 1520 (enacted 2021) requires public utilities that own and operate an electric generating facility serving Indiana customers to operate and maintain the facility to ensure reliable and economic electric service to customers consistent with the resource reliability requirements of the regional grid operator. Utilities must also file a report with the PUC each year outlining capacity, fuel sources, the demand resources available to the public, any planning reserve margin or other federal reliability requirements, and their forecasted reliability adequacy metrics for the next three resource planning years. The goal is to ensure utilities have enough capacity to ensure electric reliability and that resources needs are planned for in advance.

North Dakota SB 2313 (enacted 2021) requires the state’s transmission authority to report on the status of the resilience of the electric grid, including ability to meet load, and requires integrated resource plans to include electricity demand forecasts and plans to meet demand plus a planning reserve margin. It also creates a “reliable service obligation” that allows the PUC to levy fines and other penalties on utilities that do not meet capacity requirements or fail to provide reliable service to customers.

Texas SB 3 (enacted 2021) established the Texas Energy Reliability Council (TERC) after a winter storm to ensure energy industries meet human needs and address critical infrastructure concerns. It also requires electric generation entities to winterize their equipment according to PUC reliability standards and allows for bonds to finance these improvements. Further, it requires the PUC, with other agencies, to develop and implement an alert system to warn residents when power supply may be inadequate to meet demand. Every other year, TERC shall report to the legislature on the reliability and stability of the state’s electricity supply chain.

Virginia HB 414 (enacted 2022) requires Dominion Energy, one of the state’s largest utilities, to provide local reliability data for their service territories upon request by a locality within the service territory. It also requires the state PUC to publish a report that includes reliability metrics and descriptions of utility investments made by Dominion Energy to improve service reliability.

Diversifying Energy Resource Procurement

Several states enacted new policies that would encourage or require utilities to procure certain energy resources to ensure a reliable, resilient electricity supply. Some of these, like New York AB 8763 below, as well as Indiana HB 1520 and North Dakota SB 2313 above, augment planning or reporting mandates with resilience-focused procurement requirements to ensure that utilities meet capacity and reliability needs. While these policies often allow for cost recovery through utility rates, they should be distinguished from direct grants or loans to businesses and residents, which are described further below.

Connecticut HB 5327 (enacted 2022) allows electric distribution companies to recover costs and investments for any energy storage systems that will enhance distribution reliability or resiliency through their base distribution rates. Any net revenues from these systems shall also be returned to the ratepayers to offset any rate increases for cost recovery.

New Jersey SB 336 (pending 2022) would establish an Office of Clean Energy Equity and require a new program to establish a minimum of 1,600 megawatt-hours of energy storage in overburdened communities as part of “community energy resilience hubs.”

New York AB 8763 (enacted 2022) builds on SB 4824 by allowing utilities to recover costs associated with projects included in the utilities’ resilience plans.

Oklahoma SB 1410 (enacted 2022) requires any agency, school district, or municipality which has an energy policy in place or that chooses to develop an energy policy to develop an emergency energy plan detailing methods or sources to ensure energy is available during a state of emergency. It further requires that these plans must include policies for the acquisition of at least three distinct energy sources for power generation.

Rhode Island HB 6144 (enacted 2021) requires electric and natural gas distribution utilities to submit to the PUC a plan for system reliability and energy efficiency and conservation procurement. System reliability procurement refers to renewable energy, distributed generation, backup power generation, or demand response programs that are designed to provide local system reliability through load control or on-site generation.

Texas SB 415 (enacted 2021) allows transmission and distribution utilities, with PUC approval, to contract with a generation company that provides electricity from an energy storage resource. Approval is contingent on several factors, including that the energy storage to be contracted must intend to increase reliability of electricity delivery and be more costeffective than building new traditional distribution facilities.

Grants, Loans, and Tax Incentives for Energy Resilience

In addition to requiring utilities to procure resilience resources or allowing them to recover investments through customer rates, legislatures in a handful of states recently moved to provide direct grant funding to residents and businesses who want to purchase and install energy resilience improvements. Often, these grants are designed to help build local microgrids or distributed energy resources that are intended to improve electric reliability and resilience in the face of disruptions, but others aim to support a broader, less-specific range of resilience measures.

Other legislation instead provides low- or zero-interest loans for those seeking to implement energy resilience measures and technologies.

Colorado HB 1013 (enacted 2022) creates the Microgrids for Community Resilience Grant Program for cooperative electric associations and municipally owned utilities to purchase microgrid resources for eligible rural communities within their service territories. The goal is to fund microgrids that will improve the resilience of rural communities’ energy resources to severe weather or natural disasters.

Maryland HB 31 (enacted 2022) establishes a Resiliency Hub Grant Program and funding within the Maryland Energy Administration. Priority shall be given to resiliency projects that use community solar and those providing more than 30% of the system’s output to low- and moderate-income subscribers. Businesses, nonprofits, local governments, and state agencies may all apply for funding.

New Jersey AB 336 (pending 2022) would require electric public utilities to establish an interest-free revolving loan program to help residential customers purchase standby emergency power generators.

Oregon HB 2021 (enacted 2021) established a $50 million grant program to support community energy resilience projects that use “renewable energy systems to support the energy resilience of structures or facilities that are essential to the public welfare.” Under the new law, microgrid-enabling technologies are included in the definition of “renewable energy systems.” The bill also more broadly aims to meet clean energy targets and state energy justice goals.

Virginia SB 756 (enacted 2022) creates a permanent Resilient Virginia Revolving Fund. Among the allowable uses are grants to local governments to provide low-interest loans or grants to fund energy resilience projects.

At least three states created new tax assessment financing programs or added resilience measures as eligible investments under existing clean energy financing programs, often called “C-PACE” programs, while Georgia also considered this path forward. C-PACE programs allow property owners to finance improvements through increases in their assessed property taxes over a certain length of time. By including resilience improvements in the program, states can help offset the upfront costs for residents and businesses to install resilient energy resources on their properties.

Alaska HB 227 (enacted 2022) allows municipalities to create energy and resilience assessment programs to finance energy improvements—including microgrids and energy storage—to enhance building resilience to earthquakes, floods, fire, wind, and other hazards. This may operate similar to C-PACE programs in other states to incentivize resilience.

Connecticut SB 93 (enacted 2022) expands the state’s Commercial Property Assessed Clean Energy Program (C-PACE) program to also allow financing to be used for resilience improvements for commercial properties.

Tennessee SB 795 (enacted 2021) established a Commercial Property Assessed Clean Energy and Resilience (C-PACER) program in the state. Qualified improvements for financing include energy storage and other measures that can improve resilience. SB 1990 (enacted 2022) amends the C-PACER program to allow additional property types and owners to those eligible for funding.

Removing Regulatory Hurdles and Expedited Permitting

A handful of bills were considered that more directly focus on removing state and local regulatory hurdles to energy projects that could enhance resilience. These bills may be intended to make it easier for utilities to pursue resilience goals, or for residents and local communities to permit and install their own energy resilience improvements and maintain power during emergencies that disrupt the broader grid. California legislators considered legislation both in 2021 and 2022 to facilitate local resilience planning and expedite local permitting reviews for distributed energy resources. While neither passed, it shows a sustained effort around local funding and permit streamlining.

California SB 99 (failed 2021) would have required the State Energy Resources Conservation and Development Commission to develop and implement a grant program for local governments to develop community energy resilience plans and expedite local government permit reviews of distributed energy resources. SB 833 (failed 2022) would have required a plan to identify critical facilities where microgrids or other distributed energy sources could meet local resilience needs, identify potential funding sources, and include an expedited permit review process for distributed energy resources by local governments.

Maine HB 782 (enacted 2021) allows and further supports the buildout of microgrids “that are in the public interest,” including those that improve grid resilience and reliability. Among the measures is a provision allowing individuals to build and operate microgrids under certain conditions without being regulated as a utility.

New Mexico HB 245 (enacted 2021) clarifies that grid modernization projects approved by the PUC may include distribution system hardening projects for substations designed to reduce service outages or service restoration times, projects that enhance distribution planning, smart grid devices, and other projects that can help energy resilience and reliability.