Navigant Research Blog

In the Power Sector, the Lawyers Are in Control

Bob Lockhart — April 23, 2013

During a recent thunderstorm, a power surge fried the motor of my pool pump.  With prime algae-growing season nearly upon us in Texas, this was suboptimal timing.  Still, being a smart grid researcher, I thought I’d write to my co-operative power supplier, CoServ, and find out what happened.  So I sent a short note via their “Contact Us” web page, asking if they could look into their distribution management system for that Sunday morning and see if there had been a power swell in my neighborhood.  This was purely out of curiosity – this is what I do for a living, right?  Here’s the reply that I received about 4 days later:

 Thank you for taking the time to contact CoServ Electric. As you are aware there were adverse weather conditions in your area at the time of the service abnormalities.

CoServ Electric works hard to ensure all our members receive reliable service. However, because of the nature of the electric utility industry, continuous service cannot be guaranteed. (For example, situations involving animals on the lines, unforeseeable equipment issues, or weather events such as happened in your case.) Because this event was an “Act of God” and not something we could have foreseen or prevented, we cannot accept liability for any reported damage. We recommend contacting a qualified electrician to make sure your electric service beyond the point of service (the electric meter) is properly protected from common outside disturbances.

Thank you again for your report and for allowing us to serve you as a member of CoServ Electric. If you would like to discuss this situation further, feel free to contact me.

Okay, I admit that lots of people walk around with an entitlement mentality.  Still, it would never occur to me that my power utility is responsible for lightning strikes.  Is CoServ up there in the sky hurling thunderbolts at my pool?  Of course not.  They bear no liability for the pump.  So why such a defensive response?

Litigation Phobia

Here’s my theory: because their lawyers made them to do it.  In its 108-page tariff for electric service, CoServ already states that it is not responsible for acts of God.  Nor should it be.  Making any utility liable for all acts of God in its service area would most likely render that utility bankrupt.

And that’s the problem.  I have seen (but will not link here) job postings for “NERC Compliance Manager” where one of the essential candidate requirements is a law degree.  An analysis of NERC CIP v4, which added additional clarification of the term “critical cyber asset” (CCA), shows 17 new clauses to define a CCA.  Each of those clauses gives a utility enough wiggle room in a courtroom to escape penalty.

I’m currently researching cyber security for smart grid telecommunications.  As ever, the overriding investment theme for cyber security emerges as avoidance of fines or litigation.  After 23 research interviews I have a consensus response that there are a handful of utilities in the United States that proactively address cyber security, in each case because of a single individual that really cares.  The remaining utilities are characterized by my contacts as doing the minimum necessary to avoid legal consequences.

Don’t get me wrong – I’m all for keeping our utilities healthy financially.  From a purely selfish perspective, researching those utilities puts bread on my table.  But – can we please focus on operations and reliability, not legal ramifications?

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