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An Insurance Perspective on U.S. Electric Grid Disruption Costs

Author

Listed:
  • Evan Mills

    (Lawrence Berkeley National Laboratory)

  • Richard B Jones

    (Engineering and Research, Hartford Steam Boiler Insurance and Inspection Company)

Abstract

Large yet infrequent disruptions of electrical power can impact tens of millions of people in a single event, triggering significant economic damages, portions of which are insured. Small and frequent events are also significant in the aggregate. This article explores the role that insurance claims data can play in better defining the broader economic impacts of grid disruptions in the U.S. context. We developed four case studies, using previously unpublished data for specific actual grid disruptions. The cases include the 1977 New York City blackout, the 2003 Northeast blackout, multi-year national annual lightning-related electrical damage and multi-year national line-disturbance events. Insured losses represent between 3 and 64 per cent of total loss costs across the case studies. The household sector emerges as a larger locus of costs than indicated in previous studies, and short-lived events emerge as important sources of loss costs.

Suggested Citation

  • Evan Mills & Richard B Jones, 2016. "An Insurance Perspective on U.S. Electric Grid Disruption Costs," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(4), pages 555-586, October.
    • Handle: RePEc:pal:gpprii:v:41:y:2016:i:4:d:10.1057_gpp.2016.9
    DOI: 10.1057/gpp.2016.9
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    References listed on IDEAS

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    1. LaCommare, Kristina Hamachi & Eto, Joseph H., 2006. "Cost of power interruptions to electricity consumers in the United States (US)," Energy, Elsevier, vol. 31(12), pages 1845-1855.
    2. Adam Smith & Richard Katz, 2013. "US billion-dollar weather and climate disasters: data sources, trends, accuracy and biases," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 67(2), pages 387-410, June.
    3. Hines, Paul & Apt, Jay & Talukdar, Sarosh, 2009. "Large blackouts in North America: Historical trends and policy implications," Energy Policy, Elsevier, vol. 37(12), pages 5249-5259, December.
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    Cited by:

    1. Larsen, Peter H. & Boehlert, Brent & Eto, Joseph & Hamachi-LaCommare, Kristina & Martinich, Jeremy & Rennels, Lisa, 2018. "Projecting future costs to U.S. electric utility customers from power interruptions," Energy, Elsevier, vol. 147(C), pages 1256-1277.

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