COVID-19 and the Utilities Industry
By Eric Johnson
As an essential service, utilities will continue functioning within the near future, barring any significant updates from the medical community. As a result, significant near-term changes to how operations will be conducted should be considered both from a current state perspective, and a “re-opening” perspective i.e. when businesses are allowed to serve the general public once again, most likely on some sort of staggered basis.
COVID-19 and the Utilities Industry: Protecting Workers and Safety
Social distancing and other pandemic-limiting efforts will put constraints on line workers’ ability to work as a team and to perform essential services. Some utilities have turned to efforts such as staggered shits to reduce the transmissibility of the virus. Others have enacted “shelter in place” initiatives where distribution linemen will spend several days isolated as a team, similar to how some transmission linemen will stay localized in remote locations to complete work. While the goal of these efforts is to limit the number of external opportunities to transmit the virus, it may extend the amount of time required to complete tasks and overall jobs.
Most organizations will discontinue disconnects and other non-mandatory work and focus on keeping the lights on. While this is happening, it is important for the organization to keep a focus on safety and potentially use these times to review practices and procedures and implement best practices.
Emergency Management Teams
Coordinating emergencies is a core competency among utilities, but often times these tend to be weather or structurally related. The pandemic complicates these issues by limiting travel and interaction amongst employees. As office workers begin to work remotely, the challenge of coordinating moving parts rises as a limit is placed on the number of individuals that can be in the command center. Additionally, plans must be put in place to consider if core individuals fall ill or if certain areas are considered hot spots for transmission. Lastly, the pandemic will create additional complications to attending to other emergencies should they arise. For example, a major storm crippling power, complicated by key personnel out of work due to illness is a realistic scenario that should be accounted for.
Assisting local communities
A number of utilities have also come to the assistance of both other essential provides and their customers. Pledging grants to other essential services fighting the spread of the virus gives a much needed shot in the arm to local non-profits and hospitals needing significant help at this time. Additionally, there will be requests for bill freezes, deferments, and other account modifications as both individuals and businesses experience the downturn. Those utilities that focus on community involvement and assistance will illustrate their connection to the community and the commitment to assisting others that will serve as elements of goodwill when it is most needed.
As with all other businesses, the slow down in production will affect revenues for this quarter and possibly next. Utilities are already reporting significant drops in demand due to the slowdown – anywhere from 3% to upwards of 21% depending on the region. While expected to come back during the 2nd half of the year, utilities should be preparing shareholders for potential dividend decreases, while offering plans on how they will recover moving forward. While some costs may be shifted to pass-through, shareholders will be expected to shoulder some of the pain as well.
COVID-19 and the Utilities Industry: Planning ahead
As the pandemic starts to plateau, organizations should begin to plan for the shifts in demand as the economy starts to ramp up. Most organizations have already developed scenarios for the next six months, with variables consisting of state and local go-aheads for businesses to reopen. For smaller groups and co-ops with fewer resources, reliance on industry groups such as EEI and NCERA can provide much needed advice and information. The key factor here is asking the tough questions and staying abreast of information as much as possible to reduce variability and create as much certainty around future plans as possible.