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Stopping copper theft becomes big-time business

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Copper theft is costing businesses in the U.S. some $1 billion a year—mostly through the destruction of property that thieves strip of the metal. But now a growing industry is rising up to stop them.

The FBI has said copper theft is threatening U.S. critical infrastructure—electrical substations, cellular towers, telephone land lines, railroads, water wells, construction sites, and even vacant homes.

Copper is valuable because it's used for so many items—from fiber optics to plumbing to all things electrical. And at about $3 a pound, its price as scrap remains enticing for crooks.

Now businesses are selling a variety of services to catch copper thieves—even before they strike—implementing everything from heavy steel encasing to video surveillance and satellite technology.

(Read more: Copper theft 'like an epidemic' sweeping US)

"Preventing copper theft is a big part of our business," said Keith Jentoft, president of Videofied, a manufacturing firm that produces wireless theft monitoring devices for commercial and residential property.

"Our products are used on phone cell towers, power substations, construction sites, anywhere there's copper tubing or wiring," said Jentoft, whose firm has been in business since 2000 and employs more than 100 people.

Jentoft said an anti-theft system from his firm can cost $2,000 to $3,000.

"And our revenues are increasing. We've been doubling them every year," he said.

Copper theft services represent a growing part of the business for property protection firms like VPS.

"Depending on the situation, we'll put in heavy steel fortresses around air conditioning units and utility boxes, along with anything that has copper in it and looks attractive to thieves," said James O'Brien, VPS general manager. "Our job is to keep people out of the property so they don't even think of stealing copper."

O'Brien said the company's products usually cost less than $1,000. "'I'd say about 50 percent of our efforts are geared toward copper theft. There's no question our business is growing in that area," he said.

Thieves strike power stations

Utilities—whose substations are a popular target of thieves because of their large amount of copper wiring—have been using products like those offered by Videofied and VPS and dozens of other companies, to beef up their security.

'We've installed video cameras and alarms to cut down on the theft," said Pat VanSyoc, director of substation maintenance for Kansas-based Westar Energy which has been hit recently by thieves striking power stations and utility poles.

"It costs us to do this, but the theft is much worse, up to a $100,000 for us in one recent incident," he said.

"More important in stopping it, there's the danger," VanSyoc said. "Thieves don't realize the real chance of getting electrocuted, and some have died from trying to steal it. And there's the same danger to our staff when they try to repair a substation."

At least one power company said it's seeing positive results from tightened security.

"Our incidents are down and arrests are up," said Kristine Snodgrass, spokeswoman for New Jersey based PSE&G,, which had $68,000 worth of copper wire spools stolen from a substation under construction in Montgomery Township, N.J, in March.

"I don't want to say everything we've done, but we've installed tough measures like special sensors around substations, and it's working for us," Snodgrass said. "It's expensive to do, but we realized the cost of not doing anything is worse than the cost of doing this."

Some companies. like DigitalGlobe, a Colorado-based vendor of space imagery and geospatial content, have taken copper theft security to a higher level.

"We take satellite imagery and analytic data to develop location models where copper thieves might strike," said Colleen McCue, senior science director at DigitalGlobe. "We look at it from a bad guy's perspective and ask, 'Does it have areas of concealment that might help thieves break in?'"

The goal is to get in front of the theft so companies can design their structures accordingly, said McCue. She wouldn't divulge what the firm's services cost but said their customers "appreciate the value."

"We mostly work with the energy sector, but we've spoken with wireless cellphone providers as they seem interested in this technology to stop copper theft," she said.

Insurance against thievery

According to the latest statistics from the National Insurance Crime Bureau, which tracks incidents of metal theft, 25,083 claims were filed from 2009 through 2011, compared with 13,861 from 2006 to 2008. Nearly 96 percent of the claims in the more recent period were for copper theft.

These kind of stats are creating a working relationship between insurance companies and anti-theft firms to cut down on copper thieves, said Videofied's Jentoft.

"They're taking notice and contacting us about having their customers use our products to cut down on break-ins," he said. "They're seeing that some power stations and other sites with copper are not being broken into and want to recommend theft protection."

Insurance companies are reporting some declines in thefts, but payouts—due to the high cost of copper—are rising.

"In 2012 we had about 500 metal claim thefts and just over $2 million in claim payouts," said Scott Mallasee, property product director at Nationwide Insurance. "The average payout for copper theft was around $5,000."

"This year so far we've had 150 metal claim thefts with the average payout around $5,600," said Mallasee.

Swapping out copper wiring

Experts say fighting copper theft, as with so many crimes, is likely to be an ongoing battle.

"It's tied to the price of copper and as long as the demand for the metal remains high, so will the theft," said Eric Ives, an FBI spokesman.

"Some of the thieves are small-time crooks, others are more organized and sophisticated," Ives said. "We step in when there's interstate issues like cell phone towers that transmit across one state to another. Otherwise local authorities take the lead."

Attempts to pass a federal law against copper theft are stuck in Congress but several states, like California, Nevada and Washington, as well as some local jurisdictions, have recently passed stricter penalties for the crime.

"We've partnered with law enforcement agencies around the country to try and prevent this type of theft," said Nationwide's Mallasee.

"We are also encouraging home and property owners to take preventive measures like enclosing air conditioning units and using invisible ink to mark pipes for identification if they are stolen," he said.

But even with tougher laws and tougher security, some victims have opted for altering the very wiring they use in order to stop thieves.

"We're installing copperweld wiring instead of just copper in our substations," said Westar's VanSyoc.

"It has a steel core and copper on the outside," he explained. "It costs us a lot to put in but It doesn't have the same value as straight copper wiring so we expect this to cut back on thefts. I think a lot of copperweld will be used from now on."

—By CNBC's Mark Koba. Follow him on Twitter @MarkKobaCNBC.

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