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Lights Out: Pre-Planning for an Electrical Power Outage at Your Manufacturing Facility

Power outages at a manufacturing facility will bring production lines to an abrupt halt. This may translate into loss of material, breakdown of machinery, loss of productive time, and loss of income! Power outages may also cause supply chains to shut down altogether, costing you and/or your customers thousands, even tens of thousands of dollars, not to mention delays to deliveries.

How do you prepare for a power outage to minimize the potential loss to your manufacturing business? The following are several recommendations:

  1. First, you need to designate a person in the shop to become familiar with the electrical distribution system layout and design in your facility. You also need to have updated system documentation that includes one-line diagrams showing how the main components of the system are connected, including redundant equipment and available spares. Each major component should be identified by a unique name with a permanent label on the component itself, reflecting the same identifier that is in the document.
  2. Identify critical loads that will require emergency power in the event of an outage. Decide which equipment in your manufacturing facility is absolutely critical during the outage. Clearly indicate the emergency loads on the one-line diagrams.
  3. Consider installing a permanent emergency generator dedicated to the equipment marked as emergency loads. This may be a better solution than relying on portable generators that require being hooked-up after the power has gone out.

It’s important to know the running load of each emergency circuit so you know what size generator(s) will be required. The kilowatt and voltage ratings of each generator needed should be readily available before the outage to facilitate your response. Also, if portable generation is the best option for your manufacturing needs but purchasing the unit is not practical, consider setting up a rental agreement with a local vendor. Ensure that you know how many generators the vendor has in stock, how they will be delivered, the guaranteed response time and what service is available if there is problem with the generator. Plan how each generator will be connected during the emergency response time and if your staff is properly trained to do the hook-up or if you need to make arrangements with an experienced contractor. Make sure each generator fuel tank is full and that you know how to acquire more fuel in the event of an outage. Testing the generators is also ideal.

  1. If your facility has computer loads or communications systems that use an Uninterruptible Power Supply (UPS) to deal with short-term outages, develop procedures for conducting an orderly shutdown and saving data.
  2. Install a Surge Protection Device (SPD) on the incoming electrical service of the building to greatly reduce damage caused by most externally generated surges such as lightning or utility operations.

Note: the greatest cause of damage to production equipment from a power outage is typically caused by an electrical surge thrust through the system when the power first comes back on.

Careful pre-planning is instrumental in reducing the risk to your manufacturing business caused by power interruptions. In addition, if you do have a power outage that results in loss of business, ensure that you have the right manufacturing insurance program in place. This includes adding Utility Interruption coverage to your Commercial Property Policy. Utility Interruption can be designed to provide coverage for direct physical loss to your production equipment and even your electrical infrastructure. Coverage can also include damage to stock in process, or loss of income due to the interruption of your business.

For a manufacturer, coordination of Utility Interruption Coverage along with Equipment Breakdown Coverage is critical. Each covers different but similar things. Causes of Loss must be properly identified and coordinated when filing a claim to effectively trigger coverage. Together, these coverages can include destruction to electrical, steam, gas, water, sewer, telephone, or any other utility or service including transmission lines and related plants, substations, and equipment of suppliers of such services.

You should also inquire about having Business Interruption/Extra Expense coverage in the event a power outage or other utility failure causes your manufacturing shop to shut down temporarily while repairs are being made. Note that Utility Interruption coverage endorsements vary widely as to what utility services are included, whether both direct damage and business interruption loss are covered, and whether transmission lines are covered. Precision Manufacturing Insurance Services (PMIS) specializes in insuring manufacturing shops throughout California and can assist you in obtaining the right coverages for your operation.

At PMIS, we are committed to supporting the manufacturing industry with custom solutions designed to help mitigate and minimize losses and provide the insurance programs needed to step up in the event of a loss. We are available to discuss your insurance and risk management programs – just give our manufacturing insurance professionals a call at 855.910.5788.

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