Wwp Absorbs Storm Costs Shareholders, Not Customers, To Pay Damages
Washington Water Power Co.’s storm-battered customers, many of whom shivered for days in unheated houses during the ice storm, won’t be asked to pay for damages to WWP’s system.
Company officials announced Thursday they are writing off the estimated $10 million to $15 million cost of the storm - requiring shareholders to absorb the loss in the company’s fourth-quarter earnings.
“Our customers will see no change in electric prices as a result of the storm damage costs,” said Paul Redmond, WWP chairman and chief executive officer.
The Nov. 19 storm that coated the Inland Northwest with ice and broke the back of the utility’s power delivery system was the worst disaster in WWP’s 107-year history, top corporate officers said in their first media briefing since the storm.
It will take years to rebuild WWP’s system, including damaged lines, transformers and utility poles, they said. No insurance coverage was available for the storm, which knocked out power to 100,000 homes and businesses.
“We suffered terrible losses, and we lost one of our own,” said Les Bryan, WWP president, referring to the death of Jimmie Dean, a WWP gas services technician who walked into a downed power line.
Now that the storm is over, WWP is launching a review of how it handled the crisis. The internal review will take about six weeks, said Rob Fukai, vice president for external affairs.
That will be followed by a Spokane hearing on the crisis to be convened by the Washington Utilities and Transportation Commission early next year.
“We want public input. We think there are good ideas out there” on how WWP could improve its emergency response, said Fukai.
Much of the extensive damage to WWP’s electricity delivery grid was unavoidable, said Nancy Racicot, WWP’s senior vice president and general manager for energy delivery.
The utility’s power lines were built to withstand a typical Northwest winter - with occasional outages of a day or less, Racicot said.
But the system couldn’t survive the force of the Nov. 19 storm that dumped 1.24 inches of ice on the Spokane area within eight hours. That ice stayed for a week, destroying trees and transformers and snapping power lines.
According to the National Weather Service, the storm was categorized as a “once in a 115-year” event, Racicot said.
“This was war,” she added.
The WWP officials praised their employees, their customers and the community, including the city-county emergency operations center and the Red Cross shelters that comforted people and saved lives.
But WWP also admitted shortcomings in the way it handled the crisis. Among them:
It could have kept the public better-informed - especially in neighborhoods where chilled people wanted to know when crews would restore power.
WWP did not have a smoothly functioning system to bring in far-flung line crews from other utilities, including Canada. WWP plans to work more closely with other utilities in the region for a better system of emergency aid, Bryan said.
WWP’s system to coordinate people, materials and equipment needs improvement.
The company will review its tree-trimming program after widespread complaints about damage caused by ice-laden branches on power lines.
Its call center may need upgrading. It was overwhelmed during the peak of the storm, with nine times the normal volume of calls. It received more than 109,000 calls throughout the storm, 18,000 the first day.
That’s 10,000 more than the first day of WWP’s most comparable recent emergency, the October 1991 firestorm that swept the area.
“We did some things well, but we can also improve. We can learn from this experience,” Fukai said.
The WWP managers painted a chaotic portrait of the storm’s first 24 hours. Soon after the fierce storm slammed Spokane, WWP activated its storm response plan at 2 p.m., and upgraded it to a full-blown emergency by evening.
By 6 p.m., a third of WWP’s electricity distribution feeders were out of service, Racicot said.
Meanwhile, WWP’s corporate headquarters on East Mission was hit with its own problems, Fukai said.
The company’s computers kept tripping out, hampering efforts to get service orders out to repair crews. WWP experts rewrote a computer code to improve the flow of repair information.
As telephone service slowed or crashed all over town, the cellular phones WWP relies on to communicate with line crews also got overloaded, Fukai said.
Despite these problems, 75 percent of WWP’s customers had their power restored within 72 hours, Racicot said. But as the crisis stretched into Thanksgiving week, more bad weather brought new outages, and customer frustrations mounted. Repair efforts peaked on Day 6, with about 70 line crews and 52 tree-trimming crews at work.
Asked why it took so long for WWP to mobilize, Racicot said the company decided to focus first on damage to its major transmission lines before moving out into neighborhoods.
WWP could not safely use more line crews earlier in the crisis and does not plan to add more permanent crews to its staff, Racicot said. “As long as we have the opportunity to utilize mutual assistance (from other utilities), we think we’re staffed properly.”
She apologized for company “misinformation” about line crews from British Columbia and Alberta who had offered their help. WWP decided to use crews closer to home, she said. WWP at first incorrectly described the company’s decision not to use the Canadian crews as a problem with border guards, and later as a problem with questions about a liability agreement.
“We are sorry that happened,” Racicot said of the flap over the Canadian crews. A Spokesman-Review story on the incident prompted angry calls to the utility on why it was turning away help.
The WWP officials were cool to recent suggestions from customers that WWP bury its power lines to avert further catastrophes.
To protect against a similar ice storm, WWP would have to bury more than 1,600 miles of transmission and distribution lines in the greater Spokane area, they said.
That would cost $1.5 billion - more than the current $1.1 billion market value of the electric utility.
If those costs were spread over all WWP customers in Washington state, it would double retail electricity bills, the company said in an analysis it released Thursday.
The work to repair WWP’s system has only begun, said Kim Zentz, a WWP technical services manager.
“We expect to be doing ice storm jobs for several years,” Zentz said.
, DataTimes ILLUSTRATION: Photo Graphic: Turning on the power