How Much Do Arc Flash Incidents Typically Cost? A Breakdown
Curious about how much an arc flash incident costs?
August 4, 2022
An arc flash incident has two types of costs associated: Direct costs (employee-related) and indirect costs (company-related), which both can easily exceed $5 million worth of company damage and employee medical expenses.
Continue reading for more information about these dangerous electrical explosions.
ARC FLASH INCIDENTS: A COST BREAKDOWN
We break down the cost of an arc flash into direct costs (injury and fatality) and indirect costs (equipment loss and fines). It’s either employee or company-related.
According to one expert, “the average medical expense for an employee who survives an arc flash is $1.5 million. The price of litigation and settlement in arc flash cases is between $5 million and $10 million.”
Another article from Tyndale concluded that the direct costs (medical care, worker’s compensation, etc.) of an arc flash incident were “approximately $1.55 million.”
They also arrived at a total for all costs related to an arc flash incident – direct and indirect – of $15.75 million. Using a Consumer Price Index inflation calculator, that total would be equal to $23.47 million in 2018 dollars.
Yikes. So one arc flash incident can cost a business easily over 5 million. That’s not something you want to mess with.
HOW COMMON IS AN ARC FLASH?
Multiple arc flash explosions happen every day. Around 5 to 10 explosions. Of those explosions, around 23% get injured.
EHS Daily Advisor article says, “Every day in the United States, between 5 and 10 arc flash explosions occur.”
It’s also reported that “30,000 arc flash incidents happen every year. Those incidents resulted in average annual totals of 7,000 burn injuries, 2,000 hospitalizations, and 400 fatalities per year.”
Burns or injuries of any kind can result in 6 to 8 months of lost work time. More serious injuries can end a worker’s career or even cost a life.
The severity of arc flashes may lead you to believe that they aren’t common at all, especially when you factor in all the safety regulations laid out by OSHA to ensure that electrical equipment is as safe as can be.
The actual figures could be a lot higher than those listed. OSHA only requires arc flash incident reports if one of two conditions are met:
Over 2 employees are hospitalized following the incident
There’s a fatality as a result of the incident
Information from the Wellman paper: IEEE IAS ESW 2012.
Your facility is one error away from disaster mode. Stay electrical safety compliant with an arc flash study from Herzig Engineering. Click here to request a quote.
ARC FLASH EXAMPLES YOU DON’T WANT TO MIMIC
There are plenty of arc flash stories to learn from. Disaster can strike at any moment, and for these companies, it hits hard when they least expect it.
One example is Donnie’s Accident. Long story short, he got in a rush. Understandably, he was hurrying because of a hurricane coming in, and he wanted to get the job done and go home to his family.
But since he was rushing, he didn’t wear his PPE. He wasn’t able to check he had the right meter and jumped right in to do his work, then BOOM. Donnie spent the next couple of years recovering from a few minutes of unfortunately understandable complacency.
In 2019, metal smelting company ASARCO was fined $278,456 in penalties from OSHA. According to the report, three workers were left seriously injured and in hospital as a result of the incident. It occurred due to general negligence and the company not providing arc flash protective clothing. The penalties were given for two willful violations and one serious violation, demonstrating just how easily an arc flash can drain a business of hundreds and thousands of dollars.
In 2014, an electrician in North Carolina tragically lost his life in an arc flash incident. He left behind a wife and two children, and the worst part of all is that the incident could’ve been prevented had he been given the proper training and protective equipment.
Proper training, PPE, and studies are worth it. Contact Herzig Engineering today, so your company and employees stay away from electrical fines, fires, and fatalities.
WHAT ARE THE SIGNS YOU’RE AT RISK FOR AN ARC FLASH?
You’re at risk for an arc flash when you don’t have qualified workers, maintenance hasn’t been done, uninsulated tools are used, or your company has a poor safety culture.
Let’s review each one of these risks in-depth:
Not properly qualified workers – if they aren’t adequately trained on the electrical equipment they work on and also have adequate safety training, they are more likely to have an incident.
Inadequate maintenance – electrical equipment should be in Normal Operating Condition: properly installed, properly maintained, and have no evidence of impending failure. Otherwise, equipment failures can cause arc flash events all on their own (you don’t have to be actively working on the equipment for it to blow.)
Poor safety culture – Workers saying “I’ve done this a thousand times and never had an issue” or some phrase like that is a common occurrence. Fighting the complacency war is one of the hardest tasks companies face in creating a safer workplace.
Uninsulated tools are used – When working on electrical equipment, or around it, insulated tools must be used. A lot of arc flash incidents occur when metal tools or equipment are dropped or mishandled around the electrical source. This can trigger the flash and cost you thousands of dollars, yet it can so easily be prevented by using tools that are insulated against electricity.
Unsafe & messy work environments – Keeping a clean work environment is essential to mitigate the risks of an arc flash happening in your business. Unsafe environments, such as those covered in dust or condensation, are more likely to cause these incidents. Likewise, any equipment that’s corroded will be at a greater risk of generating an arc flash. You need to run proper safety checks around the workplace to ensure that high standards are set at all times, keeping the area safe.
Training your employees to understand how to avoid these incidents is vital to reducing your risk. If you’re required to work on electrical equipment, ensure that the electricians are experienced and qualified – and that they have arc flash protective equipment on at all times.
A large portion of the studies we conduct run between $15,000-$100,000. That number is largely dependent on the amount of information provided for quoting, as well as the ability to assist our team throughout the process.
At a base level, the overall size and usage of the facility play a large part in the pricing. A building the size of six football fields that is all (electrically) empty warehousing space is much different from a gas-station-sized data center packed full of power and redundancies.
Additionally, do you need extra services like protective device coordination or equipment evaluation? Those add additional engineering time, but the benefits are tenfold.
So really, an arc flash study could be close to the cost of a nice used car for a teenager learning to drive, or it could be a hefty down payment on a mansion in Beverly Hills.
The value of performing an Arc Flash Hazard Analysis (AFHA) study far outweighs the headaches that would come out of an electrical incident. Loss of production, injury, damage to equipment, and repairs (the list goes on) could cost you millions of dollars.
In summary, arc flash incidents can easily cost you upward of $5 million in direct and indirect costs. Plus, you have to deal with a loss of reputation, and potentially the loss of employees.
The consequences of an arc flash can be fatal, which is why you must take steps to prevent them from happening.
An Arc Flash Study is the first line of defense, outlining the main risks and hazards in your workplace. Once you know the risks, you can take steps to correct them and prevent arc flashes from happening.
The cost of an Arc Flash Study will always be much less than the cost of dealing with arc flash incidents.
At Herzig Engineering, we provide electrical safety consulting, training, and system studies to reduce risk and create a safer, more efficient workplace.
Request an electrical safety quote today, so you stay compliant.
About the Author
We write about workplace and electrical safety. We want every worker to go home safely to their families and fulfill their job duties without risk.