Energy Emergency Response: State Legislation from 2021 and 2022
Increasingly destructive weather events and a higher incidence of human-caused threats pose serious risks to America’s energy systems, keeping legislatures across the country on their toes while they work diligently to protect energy infrastructure and their residents. Natural hazards are an enduring concern, with recent examples like Hurricanes Ian and Fiona leaving millions without power, a winter storm paralyzing the Texas power grid in early 2021, and extreme heat and wildfires across the West highlighting the existing and increasing threats to our energy security. As cyber threats from both individual and group actors surge, some states have begun recognizing cyberattacks as akin to extreme weather threats. Alaska (HB 3), Illinois (HB 3523), and Colorado (HB 1236), recently passed laws related to cybersecurity preparedness and response (see the first installment for discussion of cyber and physical security).
Since 2021, state legislatures have continued to find innovative and effective ways to help their communities respond and recover, and ultimately rebuild their energy infrastructure to reduce future severe consequences. Below are several examples reflecting the range of policies states are considering. Implementation of these new policies can help create a more resilient energy system and protect key facilities and vulnerable populations from the worst effects of energy disruptions and emergencies.
Funding and Financing Support
Several recent bills either directed funding or financing toward grid restoration or hardening following damages caused by extreme weather or other disasters or allow utilities to recover these investments through customer electricity rates. South Carolina SB 1077, for instance, allows the PUC to authorize the issuance of bonds to finance regulated utilities’ recovery efforts, repaid through rate charges. The issuance of bonds can potentially reduce the immediate burden on ratepayers by spreading the costs of a utility’s recovery work over a longer period. This new law, enacted in June 2022, may receive its first test in the aftermath of Hurricane Ian, which impacted South Carolina at the end of September and left hundreds of thousands of utility customers without power after leaving another, larger trail of destruction through Florida.
- Arkansas SB 588 (enacted 2021) allows gas utilities to recover the costs of restoring storm damages through securitization, which allows costs to be spread out over time. It similarly allows gas and electric utilities to recover costs for purchasing natural gas or purchased power if the utility has to obtain additional power at extraordinary costs due to an impending storm.
- Colorado SB 206 (enacted 2022) creates the Disaster Resilience Rebuilding Program and the Sustainable Rebuilding Program to help communities rebuild after disasters to be more energy efficient and resilient. It also creates the office of climate preparedness in the governor's office to coordinate disaster recovery efforts and to develop, publish and implement the statewide climate preparedness roadmap.
- Louisiana SB 223 (enacted 2021) allows the Louisiana Utilities Restoration Corporation to finance storm recovery and system restoration costs using storm recovery bonds, subject to approval from the PUC. The bill is designed to spur investments in storm recovery, restore utility systems while minimizing costs to ratepayers and support the financial stability of utilities that have already rebuilt their systems after a natural disaster.
- Oklahoma SB 1049 (enacted 2021) allows unregulated utilities to obtain loans from the Oklahoma Development Finance Authority to cover costs incurred during a severe winter storm in February 2021. The goal is to provide financing options that may not otherwise be available to utilities and stretch out costs to ratepayers over a longer period, thereby reducing customer payments.
- South Carolina SB 1077 (enacted 2022) allows the PUC to authorize the issuance of bonds to offset or reduce utilities’ costs for storm recovery activity.
- Texas HB 1510 (enacted 2021) provides electric utilities operating outside of ERCOT with low-cost financing mechanisms such as bonds, through a newly created special purpose public corporation, to help finance costs connected to restoration of service and infrastructure after electric power outages caused by any weather-related event or natural disaster occurring after 2008. This provides incentive for utilities to rebuild and harden infrastructure following a recent winter storm while reducing the financial burden on ratepayers.
- Virginia SB 353 (enacted 2022) creates a special Emergency Shelters Upgrade Assistance Grant Fund to help local governments or other entities install, maintain and repair backup electrical generation resources at shelter facilities identified in local shelter plans.
Tax and Permitting Incentives
Some states have created new incentives or regulatory exemptions for companies to provide restoration services, helping ensure enough personnel and other utility resources are available in an emergency to maximize response efforts. These bills often facilitate the work of out-of-state businesses that aid in recovery and electricity restoration efforts by establishing incentives or waivers triggered by state or federal disaster declarations. [Side Box – “Read More | Responding to Disasters: Clearing the Way for Utilities”].
- Kentucky HB 84 (enacted 2021) waives various state and local business permitting, licensing requirements and license taxes for out-of-state businesses responding to assistance requests to perform emergency-related work in KY during a declared state of emergency. This exemption could apply to mutual aid crews dispatched by out-of-state utilities.
- Missouri HB 3 (enacted 2022) would allow vehicles used to transport utility equipment needed for electrical repairs after a disaster to exceed the state maximum vehicle weight limits. Under exigent circumstances, verbal approval by the department of transportation motor carrier compliance supervisor or other designated motor carrier services representative is allowable.
- New Hampshire SB 103 (enacted 2021), similar to KY HB 84, waives certain business registration, licensing requirements, and taxes for out-of-state businesses during a declared state of emergency.
Response Plans and Service Prioritization
Several other state legislatures have taken steps to bolster their states’ planning and response policies and procedures so that any future energy emergency response is coordinated and procedures are in place to quickly restore service in the event of a disaster or other disruption.
For example, Texas passed legislation after a 2021 winter storm to prevent future disruptions. Among these measures, HB 3648 (enacted 2021) directly addressed response efforts and would have required new rules to designate certain gas entities and facilities as critical during an energy emergency. Additional legislation focused directly on the planning response to energy emergencies are described below.
- Arkansas HB 1557 (enacted 2021) requires electric utilities to have an emergency plan in place to notify individuals with disabilities or the elderly of locations and points of contact for local warming centers during certain weather events. It further requires an electric utility to directly notify local governments of planned power outages and other emergency energy consumption reduction measures and, to the extent technically feasible, to avoid interrupting electric service and prioritize restoring power to emergency warming or cooling centers identified by local governments.
- New York AB 3318 (passed 2022) requires electric corporations to prioritize restoring services to police departments, fire departments and ambulance services when services are interrupted, and requires those facilities to be registered with the division of homeland security and emergency services to receive prioritization. The bill also prohibits electric corporations from charging ratepayers a higher rate for extra costs incurred due to prioritizing such services. When the service provider cannot restore power to any of these registered facilities that is prewired with an appropriate transfer switch to connect an alternate generation source within 24 hours, they must notify the local office of emergency management. The local office shall deploy an alternate generation source capable of providing adequate electricity to operate all life safety systems and the basic operations of a police department, fire department, or ambulance service.
- Texas HB 3648 (enacted 2021) would have required the PUC to work with the Railroad Commission of Texas to adopt rules to designate certain gas entities and facilities as critical during an energy emergency. It would also have codified that such rules must give utilities discretion to prioritize power delivery and restoration among their customers as they determine necessary based on the circumstances.
Emergency Fuel Supply and Equipment Access
State legislatures have also considered how to help ensure that energy supplies are ready and available to deploy immediately following a disaster. Such policies typically aim to provide backup energy resources or equipment to speed up power restoration or prioritize delivery of fuel and energy resources to critical facilities. For instance, New Jersey AB 3754 would help electric public utilities store equipment close to where it is likely to be needed in an emergency causing major outages, while other states considered legislation to maintain readily available fuel supplies. Texas SB 1749, listed above, also included service prioritization measures.
- Louisiana HB 740 (enacted 2022) prevents restrictions or prohibitions on the diversion, sale, transport, delivery or acceptance of gasoline, diesel, liquified natural gas, and other types of fuel across jurisdictional boundaries within the state when needed for disaster recovery. The goal is to ensure fuel is available in the immediate aftermath of a disaster to power generators, motor vehicles, homes, and other resources to provide electricity, light, heat, meals and other necessities.
- New Jersey AB 3754 (pending 2022) would allow utilities in the state to enter into agreements with private property owners to store power restoration equipment for deployment in case of service interruptions caused by disasters or similar events. This allows communities to anticipate recovery needs and strategically place necessary resources.
- New Jersey AB 3751 (pending 2022) would help utilities quickly obtain restoration equipment by allowing them to lease equipment directly from the National Guard during an emergency.
- New York AB 9323 (pending 2022) would create a gasoline priority list for first responder personnel designated by the disaster preparedness committee for priority use at service stations.
- Texas HB 2483 (enacted 2021) allows transmission and distribution utilities to lease and operate facilities that provide temporary emergency electric energy to help restore power to the utility’s distribution customers during a widespread power outage. It also allows utilities to procure, own and operate, or enter into cooperative agreements with other utilities to jointly purchase transmission and distribution facilities with long lead times to help quickly restore power. Energy storage resources are not allowed under these provisions, and resources may not be part of the bulk power system.