Florida Power & Light announced earlier this year it intends to spend $500 million over the next three years to harden its system. It will place meters to measure water levels near facilities in low-lying areas to allow for preventive shutdowns and invest in stronger poles and equipment at 250 critical facilities, such as hospitals or fire and police stations.
While Florida utilities are renowned for their hurricane-hardening efforts, other utilities have been more aggressive in planning and preparing for sea level rise. Entergy, a Louisiana energy company with 2.8 million customers in Mississippi, Louisiana and Alabama, had grown accustomed to making costly repairs after hurricanes plowed through its coverage area. In 2005, the company lost $1.5 billion from Hurricanes Katrina and Rita and spent millions on repairs.
"In the past, it was always, 'We had a hurricane, let's look at what went well and what we can do better,' " says Jeff Williams, director of climate consulting for Entergy. But the company decided that being reactive was wrong. "It's like driving while looking in the rearview mirror. You aren't planning for what could happen with the storm you haven't seen yet."
Entergy commissioned a $4-million study in conjunction with a Swiss Re, a global reinsurer, and a wetlands foundation to look at the potential impacts of future storms and sea level rise along the Gulf Coast and 70 miles inland, with projections going to 2100.
The company learned that a storm that could cause a $14-billion loss today would cause 65% more damage by 2030 in part because of climate changes. Certain investments yielded a better return. For example, investing $50 billion in improved building codes, beach renourishment and roof cover retrofits could save $145 million in annual losses over the lifetime of those measures. Levees and protecting coastal wetlands were also good investments.
Based on the study's results, Entergy has launched a pilot project in Port Fourchon in Louisiana, a staging area that provides support equipment and supplies to deep offshore oil rigs. The company is spending up to $70 million to harden transmission lines for that area. It also elevated control equipment in substations to prevent damage during floods. The study shows a 5-to-1 cost benefit for these investments.
Ultimately, Entergy's customers foot the bill. "There is an added cost involved," Williams says.