Engineering risk assessment for hydro facilities

Faced with escalating property insurance premiums, the Alaska Energy Authority decided to evaluate what losses may realistically be expected due to catastrophic events at their hydroelectric generation and transmission facilities. Ideally insurance rates are established using historic loss statistics. Where these statistics are non-existent, other means must be employed to estimate expected losses so that appropriate steps may be taken to protect investments in facilities. The natural perils of earthquake, flood, tidal wave (tsunami), wind, snow and internal failure potentially can cause catastrophic damage, but due to their infrequency in the higher magnitudes, meaningful statistics are as yet insufficient to be of value in estimating losses from these events. In order to overcome this deficiency a quasi-engineering approach can be adopted as distinct from the actuarial approach preferred and most often used by the insurance industry. This paper describes the quasi-engineering approach used for this assessment with a specific example worked through for earthquake peril