Victoria and South Australia face possible Blackouts during summer 2023 - 2024

Victoria and South Australia face possible Blackouts during summer 2023 - 2024

The Australian Energy Market Operator (AEMO) recently warned that Victoria and South Australia face an increased risk of rolling blackouts this summer, as the return of an El Niño weather pattern brings a hot, dry summer with more wind-less days. 

The main reasons stated as summer being hotter, drier, less wind; unplanned power outages from ageing coal and gas power stations; also delays in new power sources coming online. 

Impact to Businesses & Consumers

A blackout can disrupt communications, water, and transportation. As well as close retail businesses, grocery stores, service stations, ATMs, banks, and other services. Additionally, it can cause food spoilage and water contamination.

Power suppliers can impose rolling blackouts to manage services that are over-stressed by high demand during summer, making it imperative that businesses consider the possibility of these events and impacts.

While a blackout will cut the flow of electricity completely, a brownout will maintain power but at reduced capacity or with partial outages. 

A continuous power supply is mission-critical for the vast majority of businesses. These events can impact business operations and potentially severely impact production or business operations.

Managing the risks 

Risk mitigation measures can help reduce the severity and consequence of that event. For example, you can purchase a backup generator to supply your power, but this can be expensive.

Key Tips

The following steps may be useful to minimise the impact on your business:

  • Identify supplies and suppliers in the areas likely to be affected by power outages. Determine the extent of your reliance on these supplies and suppliers and the extent to which any delays might affect your ability to deliver products or services to market. Look to alternative sources if needed. 
  • Consider the possible damage to property and equipment from power brownouts or outages and disruption to operations and services. 
  • What impact will there be to cool rooms or freezers - how long will stock last without power? Has plant and machinery equipment been serviced recently to ensure they are in good working order? 
  • Review security measures. If electronic, will these be impacted? Will additional human presence be required to protect the premises during any power outages?
  • Identify critical EDP functions that might impact operations if power to data centres is lost or if an outage exceeds the capabilities of UPS systems in place.
  • If your business will run on generator power, review your fire safety protocols to ensure safe operation.
  • Prepared information for customers and suppliers about how you plan to respond and impact, such as your need to reduce services or operations in the event of a blackout or brownout. 

Insurance considerations

  • It may be time to review your insurance cover for machinery breakdown and loss of stock in cool rooms and freezers. These are usually option covers at an additional premium. 
  • Business interruption claims due to power outages can affect several insurance policy areas and require unique documentation to prove the loss to your insurer. Again, it may be time to review your insurance covers to ensure that you have the right type and amount of cover in the event of a blackout or brownout.
  • Policy limitations and exclusion. All policies have excesses or waiting times before a claim can be made. These should be reviewed. Also, optional covers such as ‘failure of utilities’ or ‘power outage in the local area’ should be reviewed, as these are excluded otherwise. 

Making an Insurance Claim

To ensure your claim is quickly reviewed, you should document all costs and extra expenses incurred and provide detailed information on any damaged property or machinery stock lost from the power outage.

Call your insurance adviser today, they can talk with you about the cover needed to manage your specific business risks and provide options, so you can make an informed decision when planning for potential blackouts. 

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Insurance Advisernet, ABN 15 003 886 687, AFSL 240549

This article originally appeared on Insurance Advisernet and has been published here with permission.

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