Around the world, local utility suppliers hadn't planned for a pandemic

In this photograph taken on on January 19, 2020, the Payra Power Plant is seen near Patuakhali, in Bangladesh. (AFP via Getty Images)

Amid the widespread recognition given to health care workers and grocery store employees during the global coronavirus crisis, there’s a group of essential workers who mostly have been overlooked: those keeping the electric lights on, the water faucets flowing, and the sewers in working order, all over the world.

As the Covid-19 pandemic set in earlier this year, utility providers quickly confronted a daunting new reality. With their services more vital than ever, maintaining the flow of power and water without disruption would require keeping employees safe and able to work. At the same time, as businesses and residential customers faced closures and job losses, utility bills would go unpaid.

“There is no existing playbook that we have to reference, to give us direction to move through this crisis,” says Gary King, chief workforce officer of SMUD, which powers Sacramento County, California, and is one of the largest community-owned electric utilities in the United States.

Around the world, the organisations that provide electricity may be publicly owned by a town, county or region; owned by a nation, like ESKOM in South Africa; investor-owned, or privately owned. Representing a variety of companies, industry leaders who participated in an international series of debriefs convened by Clarion Energy said that while they had planned for typhoons, earthquakes and other disasters, most had not anticipated a pandemic.

“One thing is to think, or design a system. Another thing is to run such an enormous experiment, like having 4,000 people working from home,” said Leonardo D’Acquisto, head of institutional relations at Italgas, an Italian distributor of natural gas. “I think when we designed our platform, we didn’t really have this idea in mind. But still, it proved to be feasible”.

Transitioning the vast majority of employees to working at home, and moving operations to digital platforms, were some of the first decisions made by power providers, in addition to committing to continue service for all customers (although in many cases, that was decided for them by their governments). Another shared experience is the decline in demand for power.

Some demand has moved to homes rather than businesses, but still, with major industries and corporate centers closed, providers report electric use decreases ranging from 5% to 15% in parts of the US, up to 26% in parts of India.

That means less revenue, as well. For example, PNM Resources, which delivers electricity to around 790,000 homes and businesses in New Mexico and Texas, reported a net loss of $15.3 million for the first quarter of 2020, compared to a net gain of $18.7 million for the first quarter of 2019. PNM is investor-owned.

Industry leaders have not yet said how they plan to manage these financial hits. “Public power is currently not receiving assistance from the federal government but will be seeking direct assistance for those utilities that are negatively impacted by the economic fallout from the Covid-19 pandemic,” says Desmarie Waterhouse, vice president for the American Public Power Association, which represents publicly owned, nonprofit power companies in the US.

“The full extent of this may not be seen for weeks – or even months – and financial concerns may seem secondary when life safety is on the line, but public power utilities must pay their workers as well as the costs of fuel that generates electricity and equipment when repairs are needed,” says Waterhouse. “We are not aware of any members currently furloughing their staff; however, that it is a possibility if the pandemic continues for months and customer non-payments continue to increase”.

In the Philippines, Quezon Power closed its offices and kept only its power production plant open, but in lockdown mode, said managing director Frank Thiel. Normal days see 265 staff members and over 300 contractors coming and going, to serve 6.6 million customers. Now, fewer than 200 people are living at the plant and running it, while others work from home.

“Morale remains very high, despite the fact that we are secluded inside,” Thiel said. It may have helped that Quezon chose to pay all staff and contractors their full salaries, including advancing the timing of payment, and adding “hazard duty pay” for those within the lockdown.

Part of making the transition to working at home has been a quick shift away from paper-based processes, sector leaders said. Billing and banking are now being done digitally. Meetings are taking place online. These types of changes will likely stay in place, post-coronavirus. And many companies report some silver linings of goodwill amid the tumult.

“We have found the consumers are cooperating a lot, which has made our job much easier,” said Rajesh Bansal, senior executive vice president of BSES Rajdhani Power Ltd. in Delhi. For example, Bansal said, customers are asking if they can be talked through performing service tasks within their homes so that company personnel don’t have to physically enter. “The mutual trust has made things much easier,” Bansal said. Within company ranks, too, being forced to do things differently has led employees to collaborate and communicate across departments more than before. “There is an unprecedented willingness to cooperate,” said Roberto Zangrandi, secretary general of European Distribution System Operators (E.DSO), an association of electricity operators in Europe.

Due to climate change, power providers have known that changes were coming to their industry even without a virus; the crisis seems to be connecting and speeding those changes. Rather than continuing to burn coal and gas to make electricity, leaders already were looking toward renewable energy sources and participating in the various “greening” plans taking shape around the world.

“We do not really see any problem affecting the long-term strategy of decarbonisation,” said D’Acquisto, of Italgas. “This will push toward a digitalised world. Decarbonisation will be enabled by more digitalisation of networks”.

Several sector leaders predict that demand could take months or years to rebound to previous levels. Ravi Krishnaswamy, senior vice president for energy and environment at Frost & Sullivan in Singapore, noted the blue skies that people everywhere are seeing due to the global decrease in pollution. To him, that means more impetus for climate action, not less. “There should be a lot of demand [for greener solutions] from people around the world,” Krishnaswamy said.

And just as the coronavirus has heightened awareness of personal hygiene and handwashing, “cyber hygiene” must be a higher priority as well, they said. Without the security provisions built into office computer networks, cyber vulnerability could increase with more people working from home on their own equipment.

“What we do is critical and essential for our society,” said Raymond Sandoval, spokesman for PNM Resources. “All those doctors and health care workers, all those firefighters and police, all those folks who are on the front lines: they can’t do their job if we don’t do our job, if we don’t provide that reliable electricity. So it’s really important to understand how we protect the grid.

“In this day and age, we’ve seen a lot of cyberattacks,” Sandoval said, “trying to get into our networks, trying to wreak havoc, by trying to see if they can take out the electrical grid by putting everybody in the dark during this horrible time. So you have to be ever-vigilant not just of the physical, but also of the virtual”.

Karen Loew is a freelance journalist based in New York City. 


What's actually in the UK government’s bailout package for Transport for London?

Wood Green Underground station, north London. Image: Getty.

On 14 May, hours before London’s transport authority ran out of money, the British government agreed to a financial rescue package. Many details of that bailout – its size, the fact it was roughly two-thirds cash and one-third loan, many conditions attached – have been known about for weeks. 

But the information was filtered through spokespeople, because the exact terms of the deal had not been published. This was clearly a source of frustration for London’s mayor Sadiq Khan, who stood to take the political heat for some of the ensuing cuts (to free travel for the old or young, say), but had no way of backing up his contention that the British government made him do it.

That changed Tuesday when Transport for London published this month's board papers, which include a copy of the letter in which transport secretary Grant Shapps sets out the exact terms of the bailout deal. You can read the whole thing here, if you’re so minded, but here are the three big things revealed in the new disclosure.

Firstly, there’s some flexibility in the size of the deal. The bailout was reported to be worth £1.6 billion, significantly less than the £1.9 billion that TfL wanted. In his letter, Shapps spells it out: “To the extent that the actual funding shortfall is greater or lesser than £1.6bn then the amount of Extraordinary Grant and TfL borrowing will increase pro rata, up to a maximum of £1.9bn in aggregate or reduce pro rata accordingly”. 

To put that in English, London’s transport network will not be grinding to a halt because the government didn’t believe TfL about how much money it would need. Up to a point, the money will be available without further negotiations.

The second big takeaway from these board papers is that negotiations will be going on anyway. This bail out is meant to keep TfL rolling until 17 October; but because the agency gets around three-quarters of its revenues from fares, and because the pandemic means fares are likely to be depressed for the foreseeable future, it’s not clear what is meant to happen after that. Social distancing, the board papers note, means that the network will only be able to handle 13 to 20% of normal passenger numbers, even when every service is running.

Shapps’ letter doesn’t answer this question, but it does at least give a sense of when an answer may be forthcoming. It promises “an immediate and broad ranging government-led review of TfL’s future financial position and future financial structure”, which will publish detailed recommendations by the end of August. That will take in fares, operating efficiencies, capital expenditure, “the current fiscal devolution arrangements” – basically, everything. 

The third thing we leaned from that letter is that, to the first approximation, every change to London’s transport policy that is now being rushed through was an explicit condition of this deal. Segregated cycle lanes, pavement extensions and road closures? All in there. So are the suspension of free travel for people under 18, or free peak-hours travel for those over 60. So are increases in the level of the congestion charge.

Many of these changes may be unpopular, but we now know they are not being embraced by London’s mayor entirely on their own merit: They’re being pushed by the Department of Transport as a condition of receiving the bailout. No wonder Khan was miffed that the latter hadn’t been published.

Jonn Elledge was founding editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.