Covid-19’s impact on electrical utilities

Reduced demand, slowed development of renewables, and worries about revenue

by Allen Best

Covid-19 has impacted electrical utilities by cutting demand, slowing development of renewable energy, and causing executives to fret about revenue. Some changes will be temporary, others permanent.

“We went from full speed to full stop within 72 hours,” said Bryan Hannegan, chief executive of Holy Cross Energy, in the recent 21st Century Transition webinar.

At Holy Cross, which serves 43,000 members in the Vail, Aspen, and Glenwood Springs areas, some of the 160 employees are only now getting back into the field for tasks such as tree trimming, previous efforts being reduced to only the most essential operations such as power outages. “There was a very real liability issue that we took seriously,” said Hannegan.

Hannegan described the social distancing measures demanded by threat of spreading covid-19 as a “interesting opportunity for innovation in the company culture.” The advantages of working remotely have been demonstrated, he said, and suggested it would be “the way we are going to be” in the future.

In the short term, Holy Cross saw a drop-off of 10% to 15% of its electrical sales in March and April, times when it would be supplying electricity to seven ski areas in the Aspen, Glenwood Springs, and Vail areas. That amounted  to just a 3% to 5% drop in sales compared to what would have been otherwise expected. Those losses can be absorbed by Holy Cross, he said.

Loss of a full ski season would be more troublesome. and would require “more fundamental changes in our business mode, in our financial structures – and in fairly short order,” he said. “For a utility, that’s not easy.”

Unlike utilities serving cities along the Front Range, for example, demand for electricity Holy Cross customers peaks during winter months.

More worrisome, added Hannegan, has been a doubling of bill non-payments. The cooperative has made $2 million available to help customers, who in cooperatives are also members, to bridge their way beyond the distress caused by lost jobs and reduced work.

Tri-State Generation and Transmission had plans for such exigencies on the shelf for years that nobody fully expected to be needed. “But the plans have performed admirably,” said chief executive Duane Highley on the same webinar sponsored by the Payne Institute of Public Policy and the Colorado Energy Research Collaboratory. “’I don’t have to be concerned about the reliability of the grid today.”

Demand has slackened for extraction of natural resources, which constitutes 40% of total demand among cooperatives in Colorado and three adjoining states who get their power from Tri-State. In individual member co-ops, natural resource extraction accounts for up to 80% of demand. “That means they will have a difficult time paying their wholesale electricity bills,” he said.

For Platte River Power Authority, which supplies Fort Collins and three other towns and cities along the northern Front Range, plans and reality were not entirely the same. “You can have every plan in the world, but until you actually have to enact that plan, and until things are happening in the real world and you’re getting different guidance from the federal, state and local levels…” said Alyssa Clemsen Roberts, the chief strategy officer. “The first two weeks were a pretty wild ride for me.”

The wild times may not be over, of course. Platte River, for example has paused its planning for its integrated resource plan. It had held one public meeting, then canceled the next one. Some work continues, said Roberts, but most of the planning has been paused until it’s possible to have face-to-face meetings. Slowed, but not paused, on a 22-megawatt solar farm and 2-megawatt battery being installed near the power provider’s Rawhide Power Plant.

In the future, she added, “economics may play a bigger role in northern Colorado than they have in the past.” It depends upon how quickly the market rebounds, how quickly people get back to work, and the impact on demand for electricity and revenue.

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Allen Best