This article is the second installment of a short series to keep insurance professionals informed on the causes, effects and outcomes of a severe power interruption that has occurred in the Northeastern United States and large regions of Eastern Canada. As technical experts to claim professionals, we have assembled information that we believe will help you in making educated coverage and valuation decisions.

In recovering from the recent regional blackout, many insured's on your books likely suffered damage to a wide array of equipment. For personal lines, this may have included such items as:

• Major appliances
• Televisions
• Satellite and digital cable boxes
• Lighting
• Air conditioning
• Computers and networking hardware
• Cordless phones
• Sump and ejector pumps

For commercial insured's, we expect damage to much of the same equipment, but in more expensive categories and with business interruption implications:

• HVAC and environment control systems
• Phone and voicemail hardware
• Electric motors (production, services)
• Alarm systems
• Computer networks, servers and internet appliances
• Office lighting
• UPS and battery back up equipment

It might seem surprising that such equipment and systems might suffer damage. After all, the blackout was simply a cessation of power and we turn the power off to equipment all of the time! How could something be damaged with the power off?

The answer is that damage can happen as power returns or as a result of the conditions that were present on the power lines as the power service failed.

When a blackout occurs, power can fail almost instantaneously, or the power can fall off relatively slowly over a few seconds. The condition where power falls off slowly can lead to a condition we commonly call a "brownout". A brownout is essentially a reduction in available electricity. This most visible result of a brownout is dimmed lights or slowed fans or blowers. What is not so easily seen is the effect it has on refrigeration, HVAC, and manufacturing equipment. In a simple case, residential and office power outlets commonly supply 110-120 volts at the outlet. The electrical power a device needs is rated as a combination of voltage and current. If the voltage drops below the rated 110-120 volts from a brownout, the current must increase to maintain the same level of electrical power. As current increases, heat increases, as does electrical stress. Ultimately, this stress can lead to equipment failure.

Under conditions of varying power supply (i.e. lower quality), rotating equipment, such as motors and compressors can be subjected to severe loading conditions that can lead to mechanical stress and possible mechanical failure.

The resumption of power service also poses hazards. In many instances, these hazards are far more perilous than those associated with onset of the blackout.

During the blackout recovery the utility must bring generators back on slowly, based on the power needs of each district and must close breakers and re-initialize protective devices accordingly. However, as generating capacity and transmission corridors are brought back online, two major problems co-exist with a network that is not yet stable:

• Customer devices coming back on and drawing current
• Spikes and sags in the electrical demand as each new device is brought back on line

The two go hand-in-hand with a blackout recovery. The first condition is commonly called the "in-rush current" effect. Essentially, when electrical equipment is turned on, it draws a large current. The in-rush can be as high as six or seven times the normal current draw. Electrical service frequently resumes with momentary failures while the system stabilizes, resulting in multiple surges.

Also, if switches and circuit breakers are not de-energized during a blackout, too many pieces of equipment may start up simultaneously when power is restored. The cumulative in-rush current may be enough to cause serious damage to electrical equipment and conductors due to overheating. This is a large scale version of what happens when a breaker in your house trips when you're using several items such as blow dryers, microwave ovens and personal heaters. If you reset the breaker without turning off or unplugging at least some of the items on that circuit, the breaker will often just trip again as soon as you reset it.

Once the equipment starts running, this early current draw settles down again quickly to normal operating levels. However, the brief in-rush can cause damage to electrical and electronic devices from surges and overheating. The damage may be nothing more than blown fuses or circuit breakers but may also include extensive component failures.

The second condition is grouped into a family of electrical disturbances commonly called "transients". Swells, spikes, surges, notches, hash and similar terms are grouped in this family. While each has a specific definition related to the duration and magnitude of the disturbance, the explanation of what is occurring during a blackout recovery is straightforward.

Under normal, stable conditions, if one were to observe standard wall outlet power on a meter, one would see a generally consistent power output.

However, even under the most stable of conditions when the entire grid is settled and working normally, if a log were kept of the wall voltage it would suffer fluctuations, some sluggish, some quite dynamic, lasting only a small fraction of a second. Common local "transients" can be created when a refrigerator compressor or air conditioner switch on or a sump pump starts.

In the case of a district or regional blackout, the sheer volume of consumers returning to service creates load conditions that cannot be immediately balanced with the supply from generators coming back on line.

Therefore, in most transformer yards, both large and small, you will find devices intended to help the power company match the voltage needs, current draw and power requirements for a particular district. The matching activity requires the switching in and out of specialized equipment. These switching events create a system wide equivalent of the refrigerator coming on, creating a system transient.

The bad news is that some customers' equipment will not react well to such conditions and fail. The good news is that the power lines themselves act like a shock absorber on such activity. The further your insured is away from the switching event, the less the effect. In essence, the power lines act like a transient volume control to "turn down" the magnitude of a transient.

What can you look for in interviews and statement taking with insured's when adjusting claims involving blackout recovery claims? Here are some helpful questions:

• Describe the events leading up to the lights going out...did the lights just black out or did they dim slowly?
• Did you go around and turn everything off? Did everything snap on when power resumed?
• What was running at the time power failed?
• Were there any odd noises from any of your equipment?
• Was there a burnt plastic, oil or grease smell in the air?
  
• Describe the recovery of power...did the power come on and stay on or were there a few power blips before the lights stayed on?
  
• Were any incandescent light bulbs blown?
  
• Gather information regarding the high draw equipment and appliances, such as refrigeration, air conditioning or machinery device, in the location.

LWG Consulting will continue to monitor and review new information as it becomes available. We remain ready to assist you with any technical equipment claims activity resulting from this event. We are well represented in the Northeastern part of North America and have technical consultants either in or very close to the states and provinces where the outages occurred. In an environment where officials will be spending weeks if not months poring over logs and actions that led up to the blackout, LWG Consulting will be available as "Your Trusted Advisor" to supply you the information, facts and advice necessary to help you get the job done.