Most Facilities and Homes are Susceptible to Lightning Strikes and Power Surges but What is the Cost

If you believe that your facility or home is protected from lightning strikes, power surges and other power disturbances you might be sadly mistaken.

Most facilities and homes are not protected from lightning strikes and power surges. A facility or homeowner needs more standards than just the National Electrical Code (NEC) to protect a facility or home from lightning strikes, power surges and other power disturbances.

Facility managers and homeowners reason for purchasing insurance is to eliminate or minimize the risk of lost from whatever the insurance policy covers. Most insurance policies do cover lightning damage to some degree but not downtime, power surges, and other power disturbances.

The typical facility manager, homeowner, and electrician does not have the technical experience and knowledge to holistically protect a facility or home from lightning strikes, power surges and other power disturbances. In most cases they do not know that holistic protection even exists.

A facility manager or homeowner must use the same thought process of risk management they used to purchase insurance for reduceing the equipment losses and downtime from lightning strikes, power surges, and power disturbances.

The major problem in holistic electrical protection is that almost no one tracks every time power is lost. Managers do not always track all cost from downtime and equipment failures. Managers and homeowners alike repair or replace what failed as quickly as possible and just move on from there.

Just losing power from the utility company is not as important to a homeowner as it is to a facility manager unless the outage last a long time. If the outages last a long time the homeowners greatest risk is to the refrigerated foods as well as the frozen foods. Whereas any loss of power to a facility causes some personal downtime.

In the United States the electrical utility companies over a 10-year period averages 0.5% of reported power outages each year. Depending on your state’s public utility commission they determine just what a power outage is.

Here is what the State of Ohio considers an outage.

Ohio Laws and Rules

Chapter 4901:1-10 Electric Companies

4901:1-10-07 Outage reports.

(A) As used in this rule, "outage" means an interruption of service to:

(1) Two thousand five hundred or more customers in an area for a projected period of four hours or more.

(2) One hundred or more customers in an area for a projected period of twenty-four hours or more.

(3) A facility of any telephone company, electric light company, natural gas company, water-works company, or a sewage disposal system company, as defined in section 4905.03 of the Revised Code and including a company that is operated not-for-profit, or owned or operated by a municipal corporation, when an interruption to that facility for a projected period of four hours or more, affects or will affect public safety.

(4) Any police department, fire department, hospital, or countywide 9-1-1 system, for a projected period of four hours or more. As used in this paragraph, "area" means the electric utility's certified territory within a county or all adjoining municipalities and townships in an electric utility's certified territory.

(B) Each electric utility shall immediately report each outage to the commission's outage coordinator. Each electric utility shall report to the commission's outage coordinator by voice mail message or e-mail or, during normal business hours, by faxing the outage report on a model form approved by the commission's outage coordinator.

As you can see Ohio’s required outage report is very friendly to the electrical utility companies and how they actually report outages. This ten-year average of 0.5% outage a year is not really valid for small or local outage the ten-year average is really unknown.

1. There has to be two thousand five hundred or more customers in an area for a projected period of four hours or more to even count as an outage.
2. There has to be one hundred or more customers in an area for a projected period of twenty-four hours or more to even count as an outage.

The third and fourth methods do not even apply to most business. If your facility or home is in an area with high susceptibility to shorter losses of power your risk is a lot higher.

The electrical downtime average of 0.5% a year equals almost 44 hours per year. As you know these hours can occur at any time of the day or night. When the power goes off it creates a power surge and when it comes back on it creates a power surge. Many time equipment fails during this time period. No one it the world can eliminate loss of power from the utility company.

The bottom line is that a facility has the potential of losing at a minimum of 44 hours of productive work time each year. It is more than likely that this loss of productive time every year over a ten-year period would average best case scenario around 440 hours. Worst case scenario who knows.

Naturally this potential loss of productive time means that the profit margin before taxes is lower than if the facility had no loss of productive time. How would lowering your labor cost each year by 0.5% to 5.0% each year and at the same time give production an additional 0.5 to 5.0% time to increase production benefit your organization?

Our field trial company had gross sales of $54M in revenue with a 2.5% gross profit ($1,350,000) before factoring in potential losses from electrical issue.

1. If they could reduce the electrical issues by 0.5% their gross profit would be 2.59% gross profit ($1,406,750). An increase in gross profit of 3.5%.
2. If they could reduce the electrical issues by 2.5% their gross profit would be 2.95% ($1,633,750). An increase of gross profit of 18% over what they had.

Depending of management decisions, they could have a 1-time investment between $56K to $284K to reduce these electrical issues for ever. Instead of averaging between a $56K to $284K loss every year from electrical issues.

When all of the information is in from of management the decision to invest to increase profits becomes an easy decision however; when managements does not know what electrical issues are actually costing the company no investment will ever take place and losses with repeat every year.