Let There Be Light
August 22, 2003
Appeared in The Business Gazette
E. Smith Yewell sees his business' emergency electrical system in a new light after a power outage last week darkened cities from New York to Toronto to Detroit.
His computer-intensive translation services company, Welocalize Inc. of Frederick, has a battery-operated backup system that can provide about six hours' worth of power. But after watching the chaos an electric grid failure caused in the Northeast, he is considering buying a larger, diesel-operated standby generator.
"The New York situation ... made us rethink it, so we're investigating," he said. "It would cost us too much to be down that long. It's hard to tell what we would lose in new business that might come through the door during that period, but certainly it'd be significant."
The blackout is expected to cost New York alone an estimated $1 billion, including more than $250 million from spoiled food at restaurants.
It is easy to discount the power failure as a once-in-a-generation occurrence, but the aging utility grid, the threat of terrorism and even the more commonplace lightning strike and construction mishap could lead to similar failures and financial losses here, energy experts say.
In the past, Yewell said, he thought the worst-case scenario for his business meant key staff finding a temporary location not far away.
"But that power outage was so widespread, it's not like you could go an hour away and get back to work," he said.
"It's funny how this has made everyone rethink their backup plans. We only had one flashlight in the office, so we thought we ought to get more than one."
Do you need a backup?
There is no formula used to determine whether a business needs a backup generator.
Biotechnology companies, restaurants, information technology companies, financial institutions and supermarkets should consider investing in standby generators, said Ann Banning-Wright, chief strategy officer of Syska Hennessy Group, a New York consulting and engineering group that helps companies develop continuity plans.
"If you're in our business, these things save you," BioReliance Corp. CFO John Coker said of the standby generators at his Rockville biotechnology company.
Labs running experiments must maintain constant air temperature, refrigeration, ventilation and computer access, Coker said. When the power goes out, the standby generators kick in automatically.
"We test it once a week, and it goes off like a rocket ship," Coker said. "It sits right outside my office -- it's about the size of the first floor of my house -- and it goes off on Wednesdays. I always seem to be on the phone when it happens."
Celera Genomics in Rockville has two massive 2,000-kilowatt generators to power its computer system and DNA sequencing machines.
"Basically, you can back up a diesel truck and power the whole building," said Michael J. Knapp, Celera's business development director and a Montgomery County Councilman.
The computers are equipped with an uninterrupted power source system that automatically saves information in the event of a shutdown, and Celera keeps about 8,000 gallons of diesel fuel on site -- enough to power the generators for three days.
But that provides only temporary relief in a power outage. The sensitive sequencing machines are made up of capillary tubes (which separate genetic materials based on molecular weight) and lasers. Any blackout would compromise the information being generated, Knapp said.
At its peak, Celera operated about 300 machines at one time, processing about eight "runs" each day.
In addition, clients pay millions of dollars to have round-the-clock access to DNA information, and they would lose that access if the computer system were to shut down.
"In a system where time is definitely money, the pharmaceutical and biotech industry, who knows when the next discovery is coming in," Knapp said.
But many smaller biotech companies find the cost of a standby generator prohibitive, said Lee Trunnell, co-owner of Trunnell Electric Inc. in Derwood, who has installed generators at several area biotechs.
The cost of a standby generating systems can range from about $8,000 for a 12-kilowatt system -- powerful enough to run a home's sump pump, lights and refrigerator -- to $500,000 for a 2,500-kilowatt system that could power an industrial plant, said Arun Bagal, a sales engineer with Cummins Power Systems Inc. in Glen Burnie.
A standard four-story office building would need a fuel storage tank capable of holding 500 to 800 gallons of fuel to maintain 24 hours of operation, he said.
The Sept. 11, 2001, terrorist attacks highlighted the importance of continuity plans for many companies, and standby electrical systems have become an important part of them.
"Before, they'd get a backup just for emergency lights," said Bagal, who has sold generators for 19 years. "Now they want the whole thing to run their business. They're willing to spend the money."
Although the need for backup power varies, the typical four-story office building requires a system that can generate 200 to 300 kilowatts to keep the lights and phones working. Such a generator would cost about $31,000 without installation, Bagal said.
Businesses also must weigh cost against benefits, Banning-Wright said. A plumbing contractor who uses the Internet to order parts, for example, may be troubled by a power outage but can still work.
"If someone's Web site goes down for a few hours and they don't run all their business there, that's an inconvenience, but it's not threatening," Banning-Wright said. "For others, the power going out even for a minute can cause a hard crash that can result in tremendous losses."
Bradley Exxon in Chevy Chase considered installing a standby generator on the roof a few years ago to keep its gasoline pumps operating during an outage, but they decided against it, said manager Bob Couchenour.
"When you figure out what the cost would be to get a big enough system to keep the station running, it's just out of this world," he said. "It's not realistic."
When the power goes out, he said, the station shuts down.
Keeping the lights on
Business owners need to decide if they can survive the losses caused by an outage before investing in a standby generator, said Harvey Goodman, president of insurance adjusters Goodman Gable Gould in Rockville.
A restaurant, which would lose not only sales but the food in refrigeration, should have a standby system, he said.
"The cost of the generator could be paid for with the loss of one night's business, and once you've got the generator you have it forever," Goodman said.
One of his clients who owned a restaurant bought a standby generator after lightning strikes knocked out power and interrupted business three times in one year.
Insurance companies generally do not cover losses caused by 24 hours or even 48 hours of interrupted power failures, he said.
Business owners who buy standby generators should negotiate with their insurers for a discount in their rates, Goodman said.
Building supply company T.W. Perry Inc. in Chevy Chase installed standby generators for all three of its stores at a cost of more than $25,000 each several years ago, COO Rich Cortese said. The generators power critical functions, such as lights and the computerized cash registers.
"It's allowed us to keep doing business under difficult conditions," Cortese said. "We'd stay open even if we didn't have backup generators. We'd just write out handbills. With the computer point of sale, it makes it a lot easier."
Supermarkets owned by Giant Food in Landover have backup generators to keep the lights on and the cash registers operating, but to protect food from spoiling the grocery chain uses old-fashioned methods like ice and dry ice, spokesman Jamie Miller said.
"From a business standpoint, it allows us to keep our stores open and serve our customers," he said.
The generators have a limited capacity, which is why the company does not rely on them to power the refrigerators and freezers.
Last week's blackout prompted Suresh Dihora, owner of Redmill Market in Derwood, to re-evaluate his options.
Next month, he said, he will buy a generator. A big one to run his refrigerators would be too expensive, he said, but he needs something to keep the lottery machine and the market's lights working. Last year, Dihora lost power during a thunderstorm for about three hours during his busiest hours.
"We lost business, and then [customers] came back," he said. "But we never thought about having a generator. I think we should now because we have a lot of expenses, and if we close for one day it will take two to three days to make that back."
His beer and wine products are safe for about 10 hours without power. In that time period, he uses common sense to keep things cool.
"It's not a big issue, but when we lose power we try not to open the cooler," Dihora said. "If a customer needs something out of the cooler, we get it for them. We try and make it easy for the customer."
More businesses will look to lease space in buildings that already have standby generators, said commercial real estate broker Victor D'Ambrosia, senior director of TSC Realty Services LLC of Bethesda.
"It's going to be a necessary evil for companies," he said. "Landlords will have to realize that, when they purchase buildings and rehab buildings, that it's the same thing with security. No one was really concerned about security before [Sept. 11, 2001], but it's a huge issue. I would have never thought of it until now, but I think a lot of companies will start to rethink how they run their companies and what they need to keep them running."
But having a standby generator is not a panacea, Banning-Wright warned: When her company tested more than 500 standby generators in preparation for the Y2K computer bug, one-third did not work.
In addition, she said, companies with generators should make sure they have contracts with fuel companies to keep the diesel coming in an emergency.
In the best-case scenario, the systems are never needed, but they give business owners peace of mind. In the worst-case scenario, they allow businesses to continue to function in an outage, which may save them in the long run.
"It could happen -- quite frankly -- anywhere," said David Morehead, a spokesman with energy utility Pepco in Washington, D.C. "At Pepco, we take very good care of the system. Be that as it may, things can go wrong.
"Is it likely? ... Let's just say we do everything we can to prevent it from happening."
That's the position taken by Metropolitan Regional Information Systems Inc., a real estate information service, said spokeswoman Mary Jo Powell. The Rockville company knows about preparing for emergencies. Last week, the company shut down for a day because of the Blaster computer worm, but because it constantly stores its data on storage tapes, it did not lose any information. The company also stores its data on other Web sites.
The company is similarly well-prepared for a power outage.
In 1999, after an ice storm left the region without electricity for days, the company invested in a dual backup system, a battery system for short-term outages and a diesel-generator system for longer blackouts.
"Even our backup has a backup," Powell said.