Guarding the Net of Uncertainty: Trends, Changes, and Challenges for Insuring Power Projects

• Pages: 70-83
• Date: 01 October 2024
• Author: Lynnette Roberts,Chase Johnson,Christopher DeBruin

Published in The Construction Lawyer Volume 43, Number 4, ©2024 by the American Bar Association. Reproduced with

permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any

means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Forum on Construction LawThe Construction Lawyer Fall 2024

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Guarding the Net of Uncertainty: Trends, Changes,

and Challenges for Insuring Power Projects

By Lynnette Roberts, Chase Johnson, and Christopher DeBruin

Lynnette Roberts is corporate risk manager at Power Engineers, Inc., in Hailey, Idaho. Chase Johnson

is senior vice president and team leader for the Construction & Design practice at Lockton Companies

in Kansas City, Missouri. Christopher DeBruin is senior vice president and director of claims at Alliant

Insurance Services in Boston, Massachusetts.

TheUSpowergrid,byandlarge,wasdesignedandbuiltinatimewhendemand for power was lower than

today’s modern needs, fossil fuels and hydroelectric power were the only means of power generation, and

utilities were governmental entities. While this description is of course an overly simplified descriptionof

thefoundingoftheUSpowergrid, it remains a useful comparison point against the United States’ modern

power grid, which is one of the largest, most complex machines in existence and includes 6,413 power

plants with approximately 1,075 gigawatts of generation capacity, 55,000 substations, 642,000 miles

of high-voltage lines, and 6.3 million miles of distribution lines.1 The USpowergridiscomprisedofa

myriadofownershipinterestsincludingpublic-private partnerships, regional transmission organizations,

independent system operators, financial institutions, and international investors.

Our 21st century life is grounded in having reliable power; yet the United States has not made many

improvements to the power grid since the 1960s and recent events demonstrate the grid’s vulnerabilities

(e.g., recent extreme weather events testing the limits of Texas’s power grid).2 Put simply, the United States

is asking more from our power grid than ever before. The United States needs reliable power, but in many

states, there is a pressure to move toward renewables, an inherently different type of power generation.

Further, transportation electrification, storm hardening efforts, and battery storage all pose unique

challenges for the current power grid.

GovernmentaloversightofthegridisdonebytheFederalEnergyRegulatoryCommission, with the mission

to “[a]ssist consumers in obtaining reliable, safe, secure, and economically efficient energy services at

a reasonable cost through appropriate regulatory and market means, and collaborative efforts.”3 State

agencies and laws also apply and may equally oversee power grid construction projects.4

The Infrastructure Investment and Jobs Act pumped millions of dollars into the economy toupgrade

USinfrastructure,includingthepowergrid.5 Dollarsareslowlymakingtheir waytoutilities,and

projectsareimprovingthereliabilityoftheelectricalgrid,includingincreasing thesecurityofourpower,

expandingpowerproductionbyaddingrenewablegeneration(e.g.,wind andsolar),andbuildingnecessary

transmissionlinestotakepowergeneratedfromnewrenewable-friendly environments into our urban

centers. As a consequence, power projects are becoming bigger and more complex.

Utilitiesinterestedinevolvingthepowergridbybuilding,improving,and/orexpandingon milesand

milesofhigh-voltagetransmissionlines,thousandsofsubstations,andthedevelopment of land for

either transmission or generation mustgive care and consideration to environmentally sensitive areas,

archeological sites, and private property of landowners who have granted the utilities right-of-way access.