Force Majeure du jour, the new COVID-19 modus operandi
- Mar 26, 2020 4:31 pm GMT
COVID-19 has affected health, happiness and incomes for many people and we are all aware of the impacts that each one of us has on each other, thanks to the rapid spread of this virus. We are all subject to the human condition and our humanity unites us. My sincere condolences to everyone that has lost someone during this pandemic and I encourage all those who have lost their incomes to stay strong and focus on the things you can do to persist through this trying time. We are all in this together, stay safe!
Force Majeure is a common condition of many contracts and energy industry tariffs, but what exactly is the criteria for invoking a force majeure? Force Majeure is defined as “unforeseeable circumstances that prevent someone from fulfilling a contract”. Frequently these circumstances are referred to as “Acts of God”, such as natural disasters, i.e. hurricanes, tornadoes, earthquakes, etc. Today, I attended a technical tele-conference hosted by the Massachusetts DPU to discuss Distributed Generation (DG) interconnection topics, which was largely dominated by the current COVID-19 pandemic and the unanimous belief that this situation is indeed considered a Force Majeure scenario, requiring all parties, including Government regulators, distribution companies, energy suppliers and construction companies to operate under unusual conditions – some would consider this a case for invoking business continuity plans.
It’s not uncommon for a distribution company to invoke its force majeure terms, conditions and procedures as a result of a natural disaster. Typically, each Company decides for itself when a force majeure is in effect, and when it is no longer necessary. But COVID-19 is a different kind of force majeure, making it very difficult to determine when this condition can be lifted and life can return to normal for everyone in Massachusetts. It’ obvious to see when a force majeure condition is warranted, and this COVID-19 cloud that overhangs us certainly has convinced many people that we are indeed in a force majeure condition and we must learn to operate under a new, temporary, normal.
Ending a force majeure condition is sometimes easy to identify, for example, power has been restored and borrowed line crews have been sent back to their own homes to resume normal life. Which raises the question; what criteria should be used to mark the end of the COVID-19 force majeure and life can return to normal? This is a topic that is currently under discussion in Massachusetts, with several parties, such as DPU, EDC’s, AGO’s and others working to determine this answer. I don’t have an answer to this question but I do have some possible factors to consider in making such a decision; I’m sure there are more:
- Governor Baker calls an end to the state of emergency
- People return to work and are no longer practicing social distancing
- An Electric Distribution Company declares to end its force majeure
- The COVID-19 infection growth rate drops below some number, i.e. 5% over some period
- The COVID-19 death rate diminishes to 0 for some period
- The US Government declares an official end to the pandemic in the US
- The WHO declares an official end to the pandemic worldwide
- Jimmy Fallon returns to live TV
- Your answer here
This topic of knowing when to call an end to the COVID-19 force majeure is under discussion in Massachusetts and several parties will be contributing to the conversation. Why should you join the conversation? Because it will determine when life can, and should, return to normal and it sure would be nice to know, in advance, what signs we can look and hope for, to mark the end of these trying times and return to normal.
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