[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
THE 2017 HURRICANE SEASON: A REVIEW OF EMERGENCY RESPONSE AND ENERGY
INFRASTRUCTURE RECOVERY EFFORTS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 2, 2017
__________
Serial No. 115-72
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
28-115 PDF WASHINGTON : 2018
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California
RICHARD HUDSON, North Carolina RAUL RUIZ, California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
7_____
Subcommittee on Energy
FRED UPTON, Michigan
Chairman
PETE OLSON, Texas BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOE BARTON, Texas JERRY McNERNEY, California
JOHN SHIMKUS, Illinois SCOTT H. PETERS, California
ROBERT E. LATTA, Ohio GENE GREEN, Texas
GREGG HARPER, Mississippi MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia KATHY CASTOR, Florida
ADAM KINZINGER, Illinois JOHN P. SARBANES, Maryland
H. MORGAN GRIFFITH, Virginia PETER WELCH, Vermont
BILL JOHNSON, Ohio PAUL TONKO, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
MARKWAYNE MULLIN, Oklahoma Massachusetts
RICHARD HUDSON, North Carolina G.K. BUTTERFIELD, North Carolina
KEVIN CRAMER, North Dakota FRANK PALLONE, Jr., New Jersey (ex
TIM WALBERG, Michigan officio)
GREG WALDEN, Oregon (ex officio)
(ii)
C O N T E N T S
----------
Page
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 2
Prepared statement........................................... 3
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 4
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 5
Prepared statement........................................... 6
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 8
Prepared statement........................................... 9
Witnesses
Patricia Hoffman, Principal Assistant Secretary, Office of
Electricity Delivery and Energy Reliability, Department of
Energy......................................................... 10
Prepared statement........................................... 13
Answers to submitted questions............................... 233
Ray Alexander, Director of Contingency Operations, Army Corps of
Engineers...................................................... 17
Prepared statement........................................... 19
Answers to submitted questions............................... 244
DeAnn T. Walker, Chairman, Public Utility Commission of Texas.... 23
Prepared statement........................................... 25
Robert F. Corbin, Deputy Assistant Secretary, Office of Petroleum
Reserves, Department of Energy................................. 37
Prepared statement........................................... 39
Answers to submitted questions............................... 251
Frank Rusco, Director, Natural Resources and Environment,
Government Accountability Office............................... 45
Prepared statement........................................... 47
Thomas A. Fanning, President and Chief Executive Officer,
Southern Company, on Behalf of the Electricity Subsector
Coordinating Council........................................... 101
Prepared statement........................................... 103
Answers to submitted questions............................... 255
Julio A. Rhymer, Sr., Executive Director and Chief Executive
Officer, Virgin Islands Water & Power Authority................ 114
Prepared statement........................................... 116
Chet Thompson, President and Chief Executive Officer, American
Fuel & Petrochemical Manufacturers............................. 125
Prepared statement........................................... 127
Max E. McBrayer, Jr., Chief Supply Officer and Chief Financial
Officer, RaceTrac Petroleum, Inc., on Behalf of the National
Association of Convenience Stores and the Society of
Independent Gasoline Marketers of America...................... 144
Prepared statement........................................... 146
Ramon-Luis Nieves, Attorney at Law, Former Member, Senate of
Puerto Rico.................................................... 155
Prepared statement........................................... 157
Catherine B. Kennedy, Vice President, National Nurses United..... 170
Prepared statement........................................... 172
Submitted Material
Letter of November 3, 2017, from Eugene Dacus, Director, Office
of Congressional Affairs, Nuclear Regulatory Commission, to Mr.
Upton, submitted by Mr. Olson \1\
Letter of October 31, 2017, from Ricardo L. Ramos Rodriguez,
Chief Executive Officer, Puerto Rico Electric Power Authority,
to American Public Power Association and Edison Electric
Institute, submitted by Mr. Olson.............................. 213
Letter of November 1, 2017, from Susan N. Kelly, President and
Chief Executive Officer, American Public Power Association, to
Mr. Upton and Mr. Rush, submitted by Mr. Olson................. 215
Letter of October 31, 2017, from Sue Kelly, President and Chief
Executive Officer, American Public Power Association, and Tom
Kuhn, President, Edison Electric Institute, to Ricardo L. Ramos
Rodriguez, Chief Executive Officer, Puerto Rico Electric Power
Authority, submitted by Mr. Olson.............................. 219
Letter of November 1, 2017, from Stephen J. Ubl, President and
Chief Executive Officer, PhRMA, to Mr. Upton and Mr. Rush,
submitted by Mr. Olson......................................... 220
Statement of Energy Information Administration, Department of
Energy, by John J. Conti, Acting Administrator, with
supplemental material, November 2, 2017, submitted by Mr. Olson
\2\
Letter of November 2, 2017, from Scott Whitaker, President and
Chief Executive Officer, AdvaMed, to Mr. Upton and Mr. Rush,
submitted by Mr. Olson......................................... 223
Letter of November 2, 2017, from Scott Gottlieb, Commissioner of
Food and Drugs, Food and Drug Administration, to Committee and
Subcommittee Leadership, submitted by Mr. Olson................ 224
Statement of the GridWise Alliance, November 2, 2017, submitted
by Mr. Olson................................................... 226
Letter of October 31, 2017, from Judith Enck, Former EPA Region 2
Regional Administrator, and Ramon Cruz, Former Commissioner,
Puerto Rico Energy Commission, to Hon. Lisa Murkowski, Chair,
and Hon. Maria Cantwell, Ranking Member, Senate Committee on
Energy and Natural Resources, submitted by Mr. Olson........... 230
----------
\1\ The information has been retained in committee files and also
is available at http://docs.house.gov/meetings/IF/IF03/
20171102/106573/HHRG-115-IF03-20171102-SD010.pdf.
\2\ The information has been retained in committee files and also
is available at http://docs.house.gov/meetings/IF/IF03/
20171102/106573/HHRG-115-IF03-20171102-SD003.pdf.
THE 2017 HURRICANE SEASON: A REVIEW OF EMERGENCY RESPONSE AND ENERGY
INFRASTRUCTURE RECOVERY EFFORTS
----------
THURSDAY, NOVEMBER 2, 2017
House of Representatives,
Subcommittee on Energy,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:34 a.m., in
room 2123, Rayburn House Office Building, Hon. Fred Upton
(chairman of the subcommittee) presiding.
Members present: Representatives Upton, Olson, Shimkus,
Latta, Harper, McKinley, Kinzinger, Griffith, Johnson, Long,
Bucshon, Flores, Mullin, Hudson, Walberg, Walden (ex officio),
Rush, McNerney, Green, Doyle, Castor, Sarbanes, Welch, Tonko,
Loebsack, Schrader, Kennedy, Butterfield, and Pallone (ex
officio).
Also present: Representative Bilirakis.
Staff present: Ray Baum, Staff Director; Mike Bloomquist,
Deputy Staff Director; Adam Buckalew, Professional Staff
Member, Health; Allie Bury, Legislative Clerk, Energy/
Environment; Karen Christian, General Counsel; Kelly Collins,
Staff Assistant; Zack Dareshori, Staff Assistant; Wyatt
Ellertson, Professional Staff Member, Energy and Environment;
Adam Fromm, Director of Outreach and Coalitions; Jordan
Haverly, Policy Coordinator, Environment; A.T. Johnston, Senior
Policy Advisor, Energy; Mary Martin, Chief Counsel, Energy and
Environment; Alex Miller, Video Production Aide and Press
Assistant; Brandon Mooney, Deputy Chief Counsel, Energy; Mark
Ratner, Policy Coordinator; Annelise Rickert, Counsel, Energy;
Dan Schneider, Press Secretary; Peter Spencer, Senior
Professional Staff Member, Energy; Jason Stanek, Senior
Counsel, Energy; Madeline Vey, Policy Coordinator, Digital
Commerce and Consumer Protection; Hamlin Wade, Special Advisor
for External Affairs; Everett Winnick, Director of Information
Technology; Andrew Zach, Senior Professional Staff Member,
Environment; Priscilla Barbour, Minority Energy Fellow; Jeff
Carroll, Minority Staff Director; Rick Kessler, Minority Senior
Advisor and Staff Director, Energy and Environment; John
Marshall, Minority Policy Coordinator; Jon Monger, Minority
Counsel; Alexander Ratner, Minority Policy Analyst; Tim
Robinson, Minority Chief Counsel; Tuley Wright, Minority Energy
and Environment Policy Advisor; C.J. Young, Minority Press
Secretary; and Catherine Zander, Minority Environment Fellow.
Mr. Upton. The Subcommittee on Energy will now come to
order.
And the Chair will recognize himself for an opening
statement.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
So, this year's Atlantic hurricane season was
unprecedented. Four named storms in close succession slammed
into the Gulf, Puerto Rico, and the U.S. Virgin Islands. These
hurricanes caused catastrophic damage and energy supply
disruptions across the country. While Texas and Florida are
further down the road to recovery, a humanitarian crisis is
unfolding in Puerto Rico--a number of colleagues from this
committee have been down there--and the U.S. Virgin Islands,
where the majority of folks still remain without power for more
than a month after Hurricane Maria made landfall.
Today's hearing will review the emergency response and
energy recovery efforts in the wake of those storms. It will
help us begin to understand what went right and what went
wrong, what lessons can be learned, and how we, as
policymakers, can identify gaps, so that when the next
hurricane hits, we will be better prepared.
As a result of Hurricane Harvey, more than 275,000
customers lost power in Texas, and severe flooding also
affected the supply and delivery of transportation fuels,
compounding response challenges and energy impacts across the
Gulf. Hurricane Irma left more than a million customers without
power across Puerto Rico and the Virgin Islands. More than 6
million customers in Florida and another million in Georgia and
South Carolina also lost power. Then, two weeks after Irma,
Hurricane Maria delivered the knockout punch, wiping out the
entire grid on Puerto Rico and the Virgin Islands. At peak,
more than 3\1/2\ million folks were without power.
As with most disasters, energy restoration is performed by
Federal, State, and local authorities, who provide vital
resources, infrastructure support, and logistical coordination,
and by industry, which provides the expertise and manpower to
restore energy supply and services.
As we have witnessed nightly in the news, recovery on the
islands has been painfully difficult and slow. Questions are
mounting regarding the role of the Puerto Rico Electric Power
Authority, PREPA, and its initial reluctance to request mutual
aid from mainland electricity companies that were standing by
ready to assist immediately after the storm. Rather than
request mutual assistance, as Texas and Florida did in the
preceding storms, PREPA took the unusual step to award a
contract to a virtually unknown company which it then canceled.
The deals that PREPA signed immediately following the storm are
now the subject of an investigation by this committee, as they
should be.
Today we are going to hear from two witness panels which
will provide perspective from the Federal level, the State
level, and the industry responder level. As we have seen in
recent weeks across the areas affected by the storms, each
disaster creates its own set of problems. Today's witnesses can
help us understand the factors that contribute to these
problems and what we may do to ensure a more effective response
going forward.
It will also help us understand the challenges that they
face as they move energy and product in the aftermath of
devastating storms. While we have seen alarming devastation, we
have also seen some aspects of the response go right. At this
point, by most accounts, the Department of Energy's support
functions have gone well. DOE's coordination of regulatory
assistance, or waivers, during the disasters has gone well.
Their informational assistance has been consistent and helpful
to Government and industry alike.
We will hear this morning about the Strategic Petroleum
Reserve, which during Harvey served to provide emergency
petroleum swaps to make up for the temporary loss of supply and
keep prices at the pump somewhat stable.
We will also receive an important update on the various
restoration efforts to bring power back to the folks of Puerto
Rico and the Virgin Islands. It will be particularly helpful to
understand what have been the barriers to a more rapid
recovery, what we are learning about coordination of emergency
response and restoration on these Territories, and what is
needed more from us, the Congress. How can we apply these
lessons going forward? This hearing should help us answer some
of those critical questions.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
This year's Atlantic hurricane season was unprecedented--
four named storms in close succession slammed into the Gulf
Coast, Puerto Rico and the U.S. Virgin Islands. These
hurricanes caused catastrophic damage and energy supply
disruptions across the Nation. While Texas and Florida are
further down the road to recovery, a humanitarian crisis is
unfolding in Puerto Rico and the U.S. Virgin Islands, where the
majority of people still remain without power more than a month
after Hurricane Maria made landfall.
Today's hearing will review the emergency response and
energy recovery efforts in the wake of these storms. It will
help us begin to understand what went right and what went
wrong. What lessons can be learned, and how we as policy makers
can identify gaps, so that when the next hurricane hits, we are
better prepared.
As a result of Hurricane Harvey, more than 275,000
customers lost power in Texas, and severe flooding also
affected the supply and delivery of transportation fuels-
compounding response challenges and energy impacts across the
Gulf Coast. Hurricane Irma, left more than 1 million customers
without power across Puerto Rico and the Virgin Islands. More
than 6 million customers in Florida and another 1 million in
Georgia and South Carolina also lost power. Then, just two
weeks after Irma, Hurricane Maria delivered the knockout punch,
wiping out the entire grid on Puerto Rico and the Virgin
Islands. At peak, more than 3.5 million people were without
power.
As with most disasters, energy restoration is performed by
Federal, State, and local authorities, who provide vital
resources, infrastructure support, and logistical coordination,
and by industry, which provides the expertise and manpower to
restore energy supplies and services.
As we've witnessed nightly in the news, recovery on the
islands has been painfully difficult and slow. Questions are
mounting regarding the role of the Puerto Rico Electric Power
Authority (PREPA) and its initial reluctance to request
``mutual aid'' from mainland electricity companies that were
standing-by ready to assist immediately after the storm. Rather
than request mutual assistance as Texas and Florida did in the
preceding storms, PREPA took the unusual step to award a
contract to a virtually unknown company which it then canceled.
The deals that PREPA signed immediately following the storm are
now the subject of an investigation by this committee.
Today, we will hear from two witness panels, which will
provide perspective from the Federal level, the State level,
and the industry responder level. As we've seen in recent weeks
across the areas affected by the storms, each disaster creates
its own set of problems. Today's witnesses can help us
understand the factors that contribute to these problems and
what we may do to ensure a more effective response going
forward. They will also help us understand the challenges they
face as they move energy and product in the aftermath of
devastating storms. While we've seen alarming devastation, we
have seen some aspects of the response go right. To this point,
by most accounts, Department of Energy support functions have
gone well. DOE's coordination of regulatory assistance (or
``waivers'') during the disasters has gone well. Their
informational assistance has been consistent and helpful to
Government and industry alike.
We'll hear this morning about the Strategic Petroleum
Reserve, which during Harvey served to provide emergency
petroleum swaps to make up for the temporary loss of supply.
We'll also receive an important update on the various
restoration efforts to bring power back to the people of Puerto
Rico and the Virgin Islands. It will be particularly helpful to
understand what have been the barriers to a more rapid
recovery. What are we learning about coordination of emergency
response and restoration on these Territories? What more is
needed from Congress? How can we apply these lessons going
forward?
This hearing should help us begin to answer these critical
questions.
Mr. Upton. And I yield now to the ranking member of the
subcommittee, my friend, the gentleman from Illinois, Mr. Rush.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. I want to thank you, Mr. Chairman, for holding
this important hearing, examining the 2017 hurricane season and
the emergency response and energy infrastructure recovery
efforts surrounding these emergencies.
Mr. Chairman, I hope this will not be a ``one and done''
hearing. Folks know in this year's historic and devastating
hurricane season that there are many, many critical
interrelated issues that must be addressed.
While I appreciate having witnesses here to discuss the GAO
report that we requested last year, the fact of the matter, Mr.
Chairman, is that, as we speak, there are still many millions
of American citizens living without electricity, and many are
facing dire life-and-death conditions. It is over a month now
that Hurricanes Harvey and Irma and Maria shattered their lives
and devastated their livelihoods.
Mr. Chairman, it is my hope that this hearing will shed
light on what additional steps need to be taken quickly to
restore power while also assuring those residents in Puerto
Rico and the U.S. Virgin Islands specifically that their
Government has not forgotten about them and that we will
provide the exact same effort and the exact same attention to
helping them as we would for any other American citizen.
Mr. Chairman, as you know, more than six weeks after
Hurricane Maria initially made landfall, nearly 70 percent of
Puerto Rico and 80 percent of the U.S. Virgin Islands still,
Mr. Chairman, still lack the power needed for basic everyday
services, such as lighting their homes, treating drinking
water, preserving food and medicine, or even making emergency
calls, among other critical functions that are so necessary to
normal and daily activities.
While immediate attention must be focused, Mr. Chairman, on
providing essential resources to protect the safety of
individuals and help them cope in maintaining their lives, over
the long term we must also help to rebuild the energy
infrastructure in a way that makes it stronger and more
resilient against extreme weather conditions.
Mr. Chairman, Hurricanes Irma and Maria exposed the
vulnerability of the Puerto Rico and U.S. Virgin Islands
electric grids to extreme weather, while some communities
expected to remain without power for even months on end. In
fact, a study released last week by the Rhodium Group concluded
that the outages caused by Hurricane Maria resulted in 1.25
billion hours of electricity-supply disruption to households in
Puerto Rico and the U.S. Virgin Islands, Mr. Chairman, making
this sole event the Nation's largest blackout that was ever
recorded. ``We can find no event in recorded U.S. history where
there were as many people without power for as long as has
occurred over the past month in Puerto Rico and the U.S. Virgin
Islands,'' the report stated.
Mr. Chairman, I look forward to engaging today's
distinguished panel on the progress that has been made, the
additional steps that must be taken to immediately get the
power back on, as well as the ways that we build more resilient
and sustainable infrastructure that is less vulnerable to an
extreme weather condition that we have witnessed and that we
certainly will witness in the future.
Thank you, Mr. Chairman. I yield back the balance of my
time.
Mr. Olson [presiding]. The gentleman yields back.
The Chair now calls upon the chairman of the full
committee, Mr. Walden, for 5 minutes.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. I thank the gentleman and acknowledge his
uniform today.
The 2017 hurricane season has been among the worst in
recent memory. Four major storms have wreaked havoc all over
our Gulf Coast and, more recently, in Puerto Rico and the
Virgin Islands. While fuel supplies and electricity have been
restored on the mainland, a humanitarian crisis continues to
unfold in Puerto Rico and the U.S. Virgin Islands, and I think
you hear that from both sides of the aisle here. This is a
real, real serious situation we all care deeply about.
As we often do following natural disasters, it is not
uncommon to see stories in the news about heroics and acts of
personal sacrifice and great kindness. We trust that our
policymakers can put aside their differences to do what is in
the best interest of the country. We have already passed
initial supplemental disaster relief funding this Congress, but
we understand that much more is needed, and we will continue to
work with the administration and our colleagues, so that our
fellow citizens can get the additional resources they need to
recover and to rebuild.
In this committee we roll up our sleeves and we search for
solutions to the various challenges that present themselves
after a major disaster. We want to make sure that the agencies
under our jurisdiction are well-prepared and that you all are
responding appropriately, both now and that we learn from
lessons of bad incidents and are ready and even better prepared
for the next storm or the next disaster.
If you are lacking certain authorities, let us know. We
would like to expedite recovery. We want to know about these
things, so that we can help fix them. We are all in this
together.
We want to be practical and we want to be forward-thinking.
How can we help ensure the relevant Federal response is well-
coordinated with State, local, and industry responders? How do
we ensure decisions are made to guarantee taxpayer funding
provides the maximum benefit for those in need and that
taxpayers aren't ripped off? If we need to rebuild, what can we
do to make our infrastructure more resilient?
Because of this committee's broad jurisdiction over public
health, emergency telecommunications, and the supply and
delivery of energy, we will be gathering facts, perspectives,
and lessons learned. We have already heard from witnesses on
our Oversight and Investigations Subcommittee hearing about
HHS's public health preparedness for and responses to the
hurricanes. We will soon examine the disaster response related
to environmental hazards and telecommunications as well.
But today we are focusing on emergency response and energy
infrastructure recovery, both for fuel supply and the electric
grid. This year we have already been confronted with several
different challenging situations: historic flooding in Houston,
possibly the greatest evacuation in Florida's history, an
energy crisis in Puerto Rico and the U.S. Virgin Islands that
could leave millions without power for estimated months to
come.
We may take for granted how lucky we are that we can flip a
switch and the lights come on. For our citizens in Puerto Rico
and the U.S. Virgin Islands, however, almost every aspect of
their lives has been deeply disrupted. Hospitals without
external generators cannot serve their patients. Getting that
power restored is critical. Water treatment plants without
power threaten the health of individuals that rely on them for
safe water. And those who live in remote areas that do not have
access to fuel are cut off even from the most basic of
necessities.
The witness panel today will provide important perspectives
about the state of current fuel and electric supply recovery
efforts, what worked, what could be done better under urgent
circumstances of the hurricanes, and what may be considered in
the future. I expect this will be an excellent hearing for us
to identify vulnerabilities and assess what is needed to better
prepare and respond to future storms and disasters.
And with that, I want to thank you for being here today. I
appreciate the testimony which you have already submitted that
I have, and thanks for the good work you and your teams are
doing out there. We really want to learn from you and be even
better prepared when the next disaster hits.
So, with that, Mr. Chairman, unless anybody else on our
side seeks the remaining minute, I would yield back.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Let me welcome Secretary Perry to his first appearance
before the Energy and Commerce Committee. I understand that
yesterday DOE held a ceremony to celebrate its 40 years as a
cabinet agency. A lot has changed in this country and in the
world since Congress created the department--especially in the
national security and energy security space, where DOE provides
critical functions for the country.
While the domestic and international energy posture is
substantially different from what it was in the 1970s, I do not
believe the importance of DOE's role serving the national and
public interest has diminished.
This past August, Secretary Perry joined me at an energy
roundtable with local officials and energy leaders at the
McNary Dam, on the Columbia River in Umatilla County, Oregon,
which produces power for the Bonneville Power Administration.
Of course, Secretary Perry could not leave Umatilla County
without a famous Hermiston watermelon--the best in the world. I
believe Secretary Perry also left with a greater appreciation
of the tremendous, zero-carbon-emitting power resource we have
that's helping grow the economy in Oregon and throughout the
Northwest.
The next day, I had the pleasure of accompanying Secretary
Perry to DOE's Pacific Northwest National Laboratory and then
to the Hanford Site, just up the Columbia River from my Oregon
district.
A couple of observations from that visit are pertinent for
today: First, it was evident that abundant energy was critical
to the historical success of Hanford's industrial operations,
which built nuclear reactors and produced the plutonium vital
to winning World War II and later maintaining the Nation's
nuclear deterrent program.
Second, Hanford's success, and subsequent cleanup
operations, led to advances in engineering practices, research
and development programs, and scientific activities necessary
for the site's safe and secure operations. These advances led
to the development of a world-class national laboratory. Today,
the Pacific Northwest National Laboratory, in collaboration and
partnership with DOE's 16 other national laboratories, provide
scientific and technical breakthroughs to meet our national
security and energy security needs-from securing our electric
grid to advancing storage technologies.
As we examine the DOE management and mission priorities
today, we should keep in mind the benefits of the
interconnected nature of the department's missions. But these
missions across DOE's enterprise can be expensive and difficult
to manage. And so, it is the responsibility of the secretary
and the Congress to ensure the department is appropriately
aligned to perform these missions in a cost-effective manner,
and to the maximum benefit of the taxpayer.
As Chairman Upton has indicated, the energy threats today
are not the same as the threats of the 1970s, but they remain
significant. This committee will work in the coming months and
through this Congress to ensure the department's organization
and missions are aligned with the energy security challenges of
today.
At my direction, Vice Chairman Barton has already started
to facilitate, in coordination with the Energy Subcommittee,
work to ensure DOE resources are focused on the core missions
of nuclear and energy security, environmental remediation, and
mission-enabling science and R&D programs. At the same time,
the committee will be examining expired DOE authorizations-many
of which expired over a decade ago, to ensure more fully
appropriate program alignment.
I look forward to your testimony, Secretary Perry, it will
be helpful to both these efforts. I'd also like for you to
address the recent questions that have arisen regarding your
travel expenditures. In closing, I look forward to working
closely with DOE and my colleagues as we ensure the agency is
positioned appropriately for the energy security challenges
that lie ahead.
Mr. Upton [presiding]. I just might ask a question of the
vice chair of the committee. Are you intending to wear that
jersey on the House floor when we take the picture of the full
House this afternoon?
Mr. Olson. Mr. Chairman, that is not an issue. I tried to
wear this about three weeks, and it was banned. So, this will
not be in the picture----
Mr. Upton. All right.
Mr. Olson [continuing]. Much to your disappointment, I can
tell.
Mr. Upton. I just was curious because, then, we would
always be able to find you forever, right, in that picture?
[Laughter.]
Mr. Walden. Now, Mr. Chairman, I yield back the balance of
my time.
Mr. Upton. Yes, the gentleman yields back.
I recognize the ranking member of the full committee, Mr.
Pallone from New Jersey, for an opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman, for convening today's
hearing reviewing the disastrous 2017 hurricane season, which
has wreaked havoc on many parts of our country.
And I am grateful to former Senator Nieves of Puerto Rico
and Mr. Rhymer of the Virgin Islands for coming here today. I
guess they are on the second panel.
But I am disappointed that the committee did not even
receive a response to its outreach to the Puerto Rico Electric
Power Authority, or PREPA. I have serious concerns not only
about how PREPA has overseen the effort to restore power in
Puerto Rico, but also, more broadly, on how PREPA has managed
or, more accurately, mismanaged the grid in Puerto Rico over
the years.
Now, today we are focusing on the energy infrastructure
recovery efforts. I must say that accounts from the areas
affected by these storms paint a dire situation that completely
contradicts the often rosy stories that come from the White
House. The truth is that, taken together, Puerto Rico and the
Virgin Islands are currently experiencing the largest blackout
in American history, and this nightmare for our fellow citizens
is far from over.
The central question for us today should be, why is it
taking so long to restore power in Puerto Rico and the Virgin
Islands, and who is actually in charge of the effort to restore
power to Puerto Rico? No one person or entity seems to be in
charge, and it is fostering a chaotic and ineffective effort to
restore power on the island. And I want answers, and so do many
of my colleagues on both sides of the aisle.
I am also troubled by the maze of contracts with numerous
companies for overlapping missions, a patchwork that is failing
to turn the lights back on in Puerto Rico. And that needs to
change now. I am deeply concerned by the terms of the contract
PREPA signed with Whitefish and Cobra Acquisitions, which went
so far as to bar PREPA from holding the companies liable for
delayed completion of grid repair work or letting the
Government audit their work. Now, Governor Rossello has since
taken steps to have the Whitefish contract canceled, but we
need to learn more about how these contracts are being awarded
and whether the bidding process is truly competitive. That is
why Chairmen Walden and Upton and Ranking Members Rush,
DeGette, and I have requested documents and a briefing from
Whitefish, so we can learn more about how that troubling
agreement materialized.
Additionally, FEMA issued a statement that said it had no
involvement in the development of this contract. Well, my
question is, why not? The Federal Government should be engaged
in the contracting process of large-scale rebuilding contracts
for which U.S. taxpayers will ultimately foot the bill. The
Federal Government needs to step up and take charge to expedite
power restoration efforts. Missions like this are why we have a
strong Federal Government. And simply put, the Trump
administration needs to be doing more. If we can't get the
power turned back on soon, more people are going to die. This
is a humanitarian crisis, and our Government owes it to the
citizens in these Territories to do everything it can to fix
it.
And while restoring power quickly is the most urgent
concern, it is also crucial that the grid in Puerto Rico and
the U.S. Virgin Islands be rebuilt with more modern energy
technology focused on increased resiliency, energy efficiency,
and renewable energy. Replacing the old grid as it stood before
the storm will cost taxpayers more money and do nothing to make
electricity in Puerto Rico more reliable or affordable.
So, as Congress prepares the next emergency spending bill,
we must make changes to the current law to enable the
rebuilding to occur in a way that lays the groundwork for
constructing a modern electricity grid in the Territories.
Failing to invest wisely in Puerto Rico now will only cost all
taxpayers more down the road. And we must consider innovative
ways for turning around Puerto Rico's situation, including
alternatives to PREPA for overseeing the rebuilding and
operation of the grid, and all ideas, from privatization--which
I am not really a fan of--but from privatization to creation of
a new Federal Power Marketing Administration. All these things
have to be up for discussion. And whatever road we go down must
have buy-in from the Puerto Rican people and the Government.
I don't know if anybody wants my minute that I still have.
If not, Mr. Chairman, I will yield back.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
Mr. Chairman, thank you, for convening today's hearing
reviewing the disastrous 2017 hurricane season, which has
wreaked havoc on many parts of our country. I am grateful to
former Senator Nieves of Puerto Rico and Mr. Rymer of the
Virgin Islands for coming here today, but disappointed that the
committee did not even receive a response to its outreach to
the Puerto Rico Electric Power Authority (PREPA). I have
serious concerns not only about how PREPA has overseen the
effort to restore power in Puerto Rico, but also more broadly
on how PREPA has managed--or more accurately, mismanaged--the
grid in Puerto Rico over the years.
Today we are focusing on the energy infrastructure recovery
efforts, and I must say that accounts from the areas affected
by these storms paint a dire situation that completely
contradicts the often rosy stories that come from the White
House. The truth is that, taken together, Puerto Rico and the
Virgin Islands are currently experiencing the largest blackout
in American history. And, this nightmare for our fellow
citizens is far from over.
The central questions for us today should be: why it is
taking so long to restore power in Puerto Rico and the Virgin
Islands, and who is actually in charge of the effort to restore
power to Puerto Rico? No one person or entity seems to be in
charge, and it is fostering a chaotic and ineffective effort to
restore power on the island. I want answers and so do many of
my colleagues on both sides of the aisle.
I am also troubled by the maze of contracts with numerous
companies for overlapping missions-a patchwork that is failing
to turn the lights back on in Puerto Rico. It needs to change
now. I am deeply concerned by the terms of the contracts PREPA
signed with Whitefish and Cobra Acquisitions, which went so far
as to bar PREPA from holding the companies liable for delayed
completion of grid repair work or letting the Government audit
their work.
Governor Rossell cents has since taken steps to have the
Whitefish contract canceled, but we need to learn more about
how these contracts are being awarded and whether the bidding
process is truly competitive. That's why Chairmen Walden and
Upton, and Ranking Members Rush, DeGette and I have requested
documents and a briefing from Whitefish so we can learn more
about how that troubling agreement materialized.
Additionally, FEMA issued a statement that said it had no
involvement in the development of this contract. My question
is: why not? The Federal Government should be engaged in the
contracting process of large scale rebuilding contracts for
which U.S. taxpayers will ultimately foot the bill. The Federal
Government needs to step up and take charge to expedite power
restoration efforts.
Missions like this are why we have a strong Federal
Government--simply put, the Trump administration needs to be
doing more. If we can't get the power turned back on soon, more
people are going to die. This is a humanitarian crisis, and our
Government owes it to the citizens in these Territories to do
everything it can to fix it.
While restoring power quickly is the most urgent concern,
it is also crucial that the grid in Puerto Rico and the U.S.
Virgin Islands be rebuilt with more modern energy technologies
focused on increased resiliency, energy efficiency and
renewable energy. Replacing the old grid as it stood before the
storm will cost taxpayers more money and do nothing to make
electricity in Puerto Rico more reliable or affordable.
As Congress prepares the next emergency spending bill, we
must make changes to current law to enable the rebuilding to
occur in a way that lays the groundwork for constructing a
modern electricity grid in the Territories. Failing to invest
wisely in Puerto Rico now will only cost all taxpayers more
down the road. And, we must consider innovative ways for
turning around Puerto Rico's situation, including alternatives
to PREPA for overseeing the rebuilding and operation of the
grid. All ideas, from privatization to creation of a new
Federal power marketing administration must be up for
discussion. And, whatever road we go down, we must have buy-in
from the Puerto Rican people and Government.
Thank you. I look forward to hearing from our witnesses
today.
Mr. Upton. The gentleman yields back.
At this point we are ready for the testimony. Thank you in
advance or thank you for sending your testimony in advance. It
will be made part of the record. We would like each of you to
take no more than 5 minutes to summarize your testimony. At
that point, when that is completed, we will be asking
questions.
We are joined first by Patricia Hoffman, the Acting
Undersecretary for Science and Energy, Principal Deputy
Assistant Secretary for the Office of Electricity Delivery and
Energy Reliability, at the Department of Energy. Welcome. Thank
you.
STATEMENTS OF PATRICIA HOFFMAN, PRINCIPAL DEPUTY ASSISTANT
SECRETARY, OFFICE OF ELECTRICITY DELIVERY AND ENERGY
RELIABILITY, DEPARTMENT OF ENERGY; RAY ALEXANDER, DIRECTOR OF
CONTINGENCY OPERATIONS, ARMY CORPS OF ENGINEERS; DEANN T.
WALKER, CHAIRMAN, PUBLIC UTILITY COMMISSION OF TEXAS; ROBERT F.
CORBIN, DEPUTY ASSISTANT SECRETARY, OFFICE OF PETROLEUM
RESERVES, DEPARTMENT OF ENERGY; AND FRANK RUSCO, DIRECTOR,
NATURAL RESOURCES AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY
OFFICE
STATEMENT OF PATRICIA HOFFMAN
Ms. Hoffman. Chairman Upton, Ranking Member Rush, and
distinguished members of the subcommittee, I appreciate the
opportunity today to discuss energy security and emergency
response issues related to the 2017 hurricane season.
The mission of the Office of Electricity Delivery and
Energy Reliability is to develop innovative, cutting-edge
solutions to ensure our Nation's energy infrastructure remains
reliable, affordable, and resilient. In order to fulfill this
mission, the Department of Energy leverages the technical
capabilities of National Laboratories and partnerships with the
key private sector stakeholders to focus on early-stage
research and transformative projects.
Our organization is also the lead for providing energy-
related expertise to the Federal Energy Management Agency, also
known as FEMA, our interagency partners, and the
administration, as part of the Department of Energy's emergency
response activities. DOE serves as the lead organization for
Emergency Support Function 12 under the National Response
Framework and as the sector-specific agency for energy. As the
lead for ESF-12, DOE is responsible for providing information
and analysis about energy disruptions and to assist in
facilitating the restoration of damaged energy infrastructure.
During Hurricanes Harvey, Irma, Maria, Nate, we have worked
with industry and the Federal, State, Territorial, and local
partners to facilitate response and recovery. Overall, DOE has
received 18 mission assignments and has deployed more than 110
personnel to the response efforts. Each of these storms has
presented unique challenges to the energy sector.
With respect to Hurricane Harvey, we saw peak electricity
outages of about 300,000 customers in Texas and Louisiana.
While offshore and onshore, crude oil and natural gas
productions were disrupted by the storm, the greatest impacts
were to the midstream and downstream oil and refining sectors.
At its peak, more than 4 million barrels per day of refining
capacity, representing more than 20 percent of the U.S.
refining capacity, was offline. It took several weeks for
floodwaters to recede, but the refining systems in Texas and
Louisiana have resumed normal operations. In addition, flooding
closed two key injection points along the Colonial Pipeline,
forcing the system to operate intermittently at reduced rates
for several weeks before normal service was resumed.
Hurricane Irma, the second category 4 hurricane to make
landfall in the United States this year, caused approximately 8
million electric customer outages from the Caribbean to the
southeastern United States. At Irma's peak on September 11th,
there were approximately 7.8 million customer outages in
Florida. Three days later, on September 14th, power had
restored to approximately 5 million customers, 64 percent of
those customers. And five days later, restoration was at 98
percent.
DOE is also playing a significant role in supporting the
restoration and recovery efforts in the U.S. Virgin Islands and
Puerto Rico from Hurricane Maria. In Puerto Rico, the U.S. Army
Corps does have the primary role in emergency restoration and
rebuilding the infrastructure, but DOE has deployed personnel
and equipment from the Western Power Area Administration to
provide mutual assistance through a mission assignment from
FEMA and is working to facilitate additional mutual assistance
with industry.
Days after Bruce Walker was confirmed as the Department of
Energy's new Assistant Secretary for the Office of Electricity
Delivery and Energy Reliability, he was on the ground in Puerto
Rico assisting other DOE personnel in coordination with the
Governor, PREPA, FEMA, and the Army Corps of Engineers.
Recently, the Governor and PREPA have requested additional line
workers and equipment necessary for the restoration of power.
Secretary Perry and our DOE team look forward to a
thoughtful conversation focused on our response and recovery
efforts for this hurricane season, and a focus on reliability,
affordability, and resilience of the electricity system from
hurricanes as well as other extreme weather events.
I would like to take a moment and thank the hard utility
workers for their time and their efforts in responding to the
hurricane season. But, like any event, there is always some
hard lessons learned, and we look forward to improving our
efforts.
So, thank you, and I look forward to your questions.
[The prepared statement of Ms. Hoffman follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Thank you very much.
Next, we're joined by Ray Alexander, the Director of
Contingency Operations for the Corps of Engineers.
Welcome.
STATEMENT OF RAY ALEXANDER
Mr. Alexander. Chairman Upton, Ranking Member Rush, and
members of the subcommittee, my name is Ray Alexander, Director
of Contingency Operations, the U.S. Army Corps of Engineers.
Thank you for the opportunity to testify today.
The Corps conducts emergency response activities under two
basic authorities, the Stafford Act and Public Law 84-99. Under
the Stafford Act, we support FEMA under the National Response
Framework as the lead Federal agency for Emergency Support
Function 3, public works and engineering. ESF-3 provides
temporary emergency power, roofing, and housing, debris
management, infrastructure assessment, and critical public
facility restoration.
Under Public Law 84-99, we prepare for disasters through
planning, coordination, and training with local, State, and
Federal partners. We assist State and local entities to
implement advanced measures that prevent or reduce storm event
damages. We repair damage to authorized Federal projects and
work with States and municipalities to rehabilitate and restore
eligible non-Federal flood infrastructure to prestorm
conditions.
When disasters occur, Corps teams and resources are
mobilized from across the command to assist local offices with
their response to the event. As part of this mission, the Corps
has more than 50 specially-trained teams supported by emergency
contracts that perform the wide range of support missions I
just described. These contracts are preawarded and can be
quickly activated to execute many of these missions.
This year the Corps has supported FEMA-led Federal response
and recovery operations in multiple events, including
Hurricanes Harvey, Irma, and Maria. FEMA directed 37 mission
assignments to the Corps for Hurricane Harvey. Currently, the
Corps has 195 employees deployed. The Corps assisted in
temporary emergency power and continues to support the State of
Texas in the development and implementation of a temporary
housing project management plan. Debris teams led by subject
matter experts continue to provide States and municipalities
the technical assistance to define requirements and monitor
debris removal and disposal operations in 15 counties.
FEMA directed 81 mission assignments to the Corps for
Hurricanes Irma and Maria. Currently, the Corps has over 1500
personnel deployed. As of this morning, the Corps has completed
over 1,000 assessments and over 500 temporary generator
installations in the Caribbean. This includes 250 assessments
and 150 installations in the U.S. Virgin Islands and over 750
assessments and 400 installations in Puerto Rico. Under FEMA
authority, we are assisting Puerto Rico with the operation and
maintenance of critical non-Federal generators across the
island as well.
The Corps has completed over 14,000 temporary roofing
installations in Florida and is on track to complete that
mission by 4 November. We have also completed over 7,000
temporary roofing installations in the Caribbean, including
over 2500 in the U.S. Virgin Islands and 4700 in Puerto Rico.
Roofing requirements have been extensive, requiring additional
material and construction support, which initially slowed
progress. We have adjusted. We have added additional capacity,
and we are seeing daily improvements.
Corps debris subject matter experts provided technical
assistance to counties across Florida and Georgia in response
to Hurricane Irma, and continue to provide oversight to five
regions within the Florida Department of Emergency Management.
The Corps is working to remove an estimated 1 million cubic
yards of debris in the U.S. Virgin Islands and over 6 million
cubic yards in Puerto Rico.
The Corps works closely with the U.S. Coast Guard and the
National Oceanic and Atmospheric Administration and local
authorities to open harbors and navigation channels across all
affected areas, critical to restoring commerce and the flow of
commodities, and essential equipment to reach affected
communities.
The Corps worked closely with officials of Texas and
Florida to manage local flood control reservoirs during a
period of unprecedented rainfall. In Puerto Rico, Corps dam and
levee teams inspected 17 priority dams and worked closely with
the Puerto Rico Electrical Power Authority, PREPA, to stabilize
a spillway feature, the Guajataca Dam. Additionally, the Corps
cleared existing outflow conduits and placed emergency pumps to
further reduce water levels in the dam, and restored flow to a
critical treatment plant that supports the needs of over 30,000
people.
On September 30th, the Corps received a FEMA mission
assignment under Stafford Act authority to assist PREPA in
conducting emergency repairs to the power grid itself. We are
partnering with PREPA. We have established a general officer
and senior-executive-led task force to oversee work and provide
technical assistance.
The Department of Energy has embedded experts in our team
and continues to assist in our efforts. Within two weeks of
receiving this mission assignment, we awarded contracts for
large-scale temporary power generation to stabilize the grid in
San Juan and for additional line repair assets that will assist
ongoing efforts by PREPA.
The Corps remains fully committed and capable of executing
other Civil Works activities across the Nation, despite our
heavy involvement in these ongoing response and recovery
operations. We also remain ready and poised to assist in future
events, should they occur.
This concludes my testimony, and I look forward to
answering any questions you may have. Thank you.
[The prepared statement of Mr. Alexander follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Thank you very much.
Next is DeAnn Walker, the Chair of the Public Utility
Commission for Texas. You have got to be a happy woman today as
well with the Astros.
STATEMENT OF DEANN T. WALKER
Ms. Walker. Yes. Thank you very much for your invitation to
appear here today.
My name is DeAnn Walker. I am the chairman of the Public
Utility Commission of Texas. I have happily held that seat
since September 20th. So, I am new to this.
I believe I have a unique perspective on restoration from
hurricanes. The State Operations Center in Texas creates what
they call a Tiger Team of utility personnel that is located
within the State Operations Center to help with restoration, to
coordinate with Federal/State officials throughout an event. I
have now served three hurricanes in the State Operations
Center. Hurricane Rita and Hurricane Ike, I was actually
representing a utility in the State Operations Center. During
Hurricane Harvey, I was working for Governor Abbott and was
down in the State Operations Center working with the utilities
to restore service.
We believe that the electric industry and the
infrastructure in Texas fared very well during Hurricane Harvey
compared to past hurricanes. As has been stated, we had under
350,000 at any one time. We had more than that, but the
utilities were continually restoring service during that time.
The longest we had any customers out was for two weeks, and
that was in the Rockport area, which was the direct hit of the
eye of Hurricane Harvey. So, it took the brunt of it. During a
storm, the PUC, as I said, works with State, Federal, and local
agencies to restore power.
I wanted to focus the rest of my time on what we are taking
as action items to better prepare for a new hurricane. Due to
the amount of flooding that we had, some cities and towns,
areas received 60 inches of rain throughout Hurricane Harvey.
Many substations in our area flooded for the first time ever.
So, we are looking at, and we moved in for the first time ever,
mobile substations to help serve those customers. We are
looking at whether or not it is prudent for the State as a
whole, all of the utilities to get together and purchase these
mobile substations to have on hand in such an event. We are
also working with the utilities to elevate those substations
when they rebuild them, so that we are taking care of hardening
the system in the process of rebuilding.
I have also asked the State to look at whether or not we
can better utilize utilities within Texas to send equipment and
personnel. We were drawing people from all over the United
States under mutual assistance crews, which we greatly
appreciate, but I would like us to look and see if we can rely
on the Texans that we have. SPS in the Panhandle and El Paso in
far west Texas never were called on to help, and obviously,
they were closer than a lot of places.
We have been working through the process with FEMA for how
to interconnect their temporary housing, so that we could have
one seamless process for all utilities to implement. We are
trying to do that on the fly. I would like us to further
address that process in the meantime before the next storm hits
us.
We also learned that not every utility is reporting outages
consistently. In Texas we require that all utilities report
outages to us and to DOE on a county- and ZIP-code-wide basis,
but there is not consistency between the utilities on how that
was being done. For instance, some of the flooded substations,
once they had a plan to bring in the mobile substation, they
took those outages and moved them to planned outages. So, they
were no longer showing up as being impacted by the hurricane. I
don't think that is an accurate representation. So, I have
asked to look at that.
There are many other things that we have started looking at
to correct and to, hopefully, do better. I am running out of
time. I wanted to, again, thank you for your time today.
[The prepared statement of Ms. Walker follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Thank you.
Next, we are joined by Robert Corbin, Deputy Assistant
Secretary for the Office of Petroleum Reserves, the U.S.
Department of Energy.
STATEMENT OF ROBERT F. CORBIN
Mr. Corbin. Chairman Upton, Ranking Member Rush, and
distinguished members of the subcommittee, it is an honor to
appear before you today to discuss the Strategic Petroleum
Reserve.
The Strategic Petroleum Reserve, or SPR, was established
under the authority of the Energy Policy and Conservation Act
in December 1975. At that time U.S. oil production was in
decline, oil price and allocation controls separated the U.S.
oil market from the rest of the world, and the global commodity
market for oil as we know it now did not exist.
Today the global oil market has changed the environment in
which the SPR operates. Although domestic oil production has
increased dramatically in recent years, the global oil market
is the largest commodity market in the world, making U.S.
consumers subject to global commodity price fluctuations.
Regardless of U.S. oil import levels, a severe global oil
supply disruption today would impact domestic petroleum product
prices.
In the event of a serious interNational oil supply
disruption, offsetting disrupted supplies with SPR crude oil in
concert with other countries that hold strategic oil stocks can
help reduce an increase in interNational oil prices and the
resulting adverse economic impacts that could otherwise occur.
The SPR maintains and operates four major oil storage
sites, two in Texas and two in Louisiana. The SPR's current
crude oil inventory is approximately 670 million barrels stored
in 60 underground salt caverns with a design capacity of 713.5
million barrels. The SPR is designed to provide the capability
to draw down and deliver crude oil from the storage sites to
designated distribution points, a design drawdown rate of 4.415
million barrels per day. The SPR can physically begin to draw
down crude oil in as little as two days of notification, and
taking into account the time required to meet sales
requirements and draw down and deliver crude oil within 13 days
of a presidential finding. SPR operating costs are less than 25
cents per barrel of design capacity per year, the lowest
reported cost among oil stock-holding Nations.
As a member of the InterNational Energy Agency, or IEA, the
U.S. has two primary oil stock-holding obligations. As a net
oil importer, the U.S. must maintain oil stock-holding
inventories equal to at least 90 days of net petroleum imports.
As of June 30th, 2017, the U.S. held 149 days of net petroleum
imports.
The U.S. must also be able to contribute a proportionate
share to an IEA collective action in response to an oil supply
disruption, based on its percentage share of IEA oil
consumption. As of June 30th, 2017, the U.S. must contribute
43.2 percent of all barrels released during any IEA collective
action.
As global oil trade increases, the potential role of the
SPR to help mitigate global supply disruptions expands,
regardless of the level of U.S. net oil imports. Without the
ability to replace disrupted oil supplies in the global market,
global oil prices could increase significantly and the U.S. and
global economy could be harmed.
SPR infrastructure has performed capability to ensure the
SPR has been able to respond to every emergency release
situation presented throughout its history. However, SPR
facilities are aging. A significant amount of infrastructure
components are at or beyond their design life, and equipment
will be further stressed due to nine consecutive years of
congressionally mandated crude oil sales.
Congress, recognizing the need to modernize SPR
infrastructure, included provisions in the Bipartisan Budget
Act of 2015 to address this concern by authorizing the drawdown
and sale of up to $2 billion worth of SPR crude oil over a 4-
year period to carry out an SPR modernization program. In
response, the SPR has initiated a major capital asset
acquisition project to modernize aging SPR infrastructure for
systems upgrades and equipment replacement to ensure the SPR
can meet mission requirements for the next several decades.
Hurricane Harvey severely impacted U.S. Gulf Coast crude
oil infrastructure, closing refineries, ports, and supply
pipelines. Many impacted refiners were operable following the
passage of Harvey, but in some cases were unable to secure
crude oil feedstock to recommence or continue operations,
resulting in multiple requests for emergency exchanges of SPR
crude oil. After assessing prevailing supply conditions and
consulting with other Federal agencies regarding the status of
crude oil infrastructure, the SPR received approval from the
Secretary of Energy to execute six emergency exchange
agreements. First deliveries of crude oil were provided on
August 30th, just two days after the initial request was
received. Deliveries to the remaining companies also commenced
within days after those requests were received and continued
until deliveries totaling 5 million barrels were completed on
September 28th. These emergency exchanges helped alleviate the
loss of crude oil supply, allowing the affected refiners to
begin and/or continue operations that otherwise would have been
halted due to the impacts of Hurricane Harvey.
This concludes my statement. Thank you for the opportunity
to speak with you today about the SPR, and I look forward to
answering any of your questions.
[The prepared statement of Mr. Corbin follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Thank you very much.
Lastly, on the first panel we are joined by Frank Rusco,
Director of the Natural Resources and Environment from the GAO.
Welcome.
STATEMENT OF FRANK RUSCO
Mr. Rusco. Chairman Upton, Ranking Member Rush, and members
of the subcommittee, thank you for the opportunity to discuss
our past and ongoing work on energy resilience and particularly
the effectiveness of the Strategic Petroleum Reserve in
responding to domestic petroleum supply disruptions caused by
extreme weather and other events.
The SPR was created at a time when global oil supply was
dominated by OPEC and oil markets were characterized by long-
term contracts with fixed prices. At that time a global oil
supply disruption, as occurred during the Arab oil embargo, had
the effect of physical oil shortages and in the United States
and elsewhere long lines at the gas pump. It made sense at the
time for the SPR to be comprised of crude oil centrally held in
cheap salt dome storage in Louisiana and Texas, near the
Nation's largest refining centers.
Today global oil markets are robust, and prices change to
accommodate supply and demand, so that physical shortages and
long lines are less of an issue. In addition, the use of the
SPR has been primarily in response to domestic supply
disruptions, particularly those caused by extreme weather
events, rather than global supply shortages. My remarks will
focus on how well the SPR is able to respond to these domestic
supply disruptions.
The SPR has been partially successful in responding to
domestic supply disruptions in instances when Gulf Coast
refineries and pipelines are operational but crude oil supplies
to these refineries have been disrupted. For example, this year
following Hurricane Harvey the SPR was able to supply several
refineries with crude oil by pipeline while shipping ports were
closed.
However, the SPR has been less effective in responding to
reductions in petroleum products in the rest of the country, as
has occurred multiple times when hurricanes have shut down
refineries or shut down power to other petroleum
infrastructure. In this latter cases, including following
Hurricane Harvey when as much as 34 percent of the Gulf Coast
refining capacity was shut in, the real supply problem was
gasoline, diesel, and jet fuel, and the SPR has only a small
reserve of gasoline in the Northeast and no other petroleum
product reserves. As a result, the SPR cannot provide needed
petroleum products to Florida, the Eastern Seaboard, and other
regions typically supplied by Gulf Coast refiners.
DOE has recognize the desirability of having regional
reserves of petroleum products. For example, in 2014, DOE
identified five regions that are vulnerable to petroleum
product supply disruptions. These include the West Coast, which
is vulnerable to earthquakes and tsunamis, parts of six
Midwestern States vulnerable to earthquakes, a number of States
vulnerable to extreme cold weather, and the entire coast from
Texas up to Massachusetts that is vulnerable to hurricanes.
With the exception of the small gasoline reserves held in
the Northeast, there are no other petroleum product reserves
held by the SPR in any of these vulnerable regions. Further,
while DOE has recognized these vulnerabilities and conducted
some studies of alternatives to the current composition and
configuration of strategic reserves, it has not completed these
studies. As a result, DOE cannot determine the efficacy of
creating regional petroleum product reserves.
In contrast to how the SPR is configured, most other
countries with strategic reserves have chosen to hold
significant quantities of petroleum products in addition to
crude oil, and some have chosen to spread these reserves out
across their countries to be closer to centers of demand. For
example, Germany chooses to hold about 55 percent of its
strategic stocks as petroleum products. France spreads its
reserves across seven geographic zones that enable it to
distribute petroleum products to distribution networks all over
the country.
The United States has benefitted from European strategic
stocks of petroleum products during past hurricane damage to
Gulf Coast refining and production infrastructure. For example,
in response to Hurricane Katrina in 2005, as prices of gasoline
rose across the United States, shipments of gasoline from
Europe began arriving on the East Coast within days. This
mitigated the economic effects of the hurricane-caused refinery
and oil production shutdowns.
As DOE undertakes a modernization program of its existing
systems, this committee and others have requested that we
undertake an evaluation of the SPR, its size, composition,
location of reserves, and options for improving its
effectiveness. We will report our findings in the next few
months.
Thank you. This concludes my oral remarks. I will be happy
to answer any questions you may have.
[The prepared statement of Mr. Rusco follows:]
[
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Upton. Well, thank you all. At this point we will move
to questions from the dais.
Mr. Alexander, you said in your testimony that the Corps is
overseeing the work that is done by PREPA in Puerto Rico. I
would like to ask the question, how has that gone? Because this
subcommittee has tried to contact PREPA both by email and
phone. They are not answering. There is no heartbeat that we
are getting back. So, how has that oversight gone?
Mr. Alexander. Sir, perhaps I misstated. We have a task
force--again, general officer, senior-executive-led--that is
overseeing our mission to restore the grid, as assigned by
FEMA. What we are doing with PREPA, though, is we are working
in coordination and collaboration with them, so that we can
have well-defined, focused areas of operation. So, we are not
working in each other's area and we ensure that there are no
gaps. We are only working with PREPA; we are not working for
PREPA, but we are working in coordination with PREPA.
The oversight of the Corps' mission assignment we believe
is going well. Again, we were assigned this mission on 30
September. Within 18 days, we were able to award three major
contracts, one for temporary power generation, two 30-megawatt
power plants to be put in the vicinity of the Palo Seco Power
Plant near San Juan, and restore the power grid around San
Juan. Those generators have arrived. They have been installed,
and we have additional load on the grid in the greater San Juan
area as of several days ago.
The other two contracts focused on line repair,
transmission distribution/line repair. A larger contract to
Fluor, a $240 million contract. They have boots on the ground
today. They are conducting assessments. They are starting to
have crews arriving. I believe, as I said in my testimony, we
are ramping up quickly, 620 by the end of this weekend, and
that number will double by mid-November.
And then, we also have a company named PowerSecure. They
are fully engaged and will be--they, too, have assessment teams
on the ground. Their equipment is actually en route by sea now
on a MARAD, Ready Reserve Fleet vessel that should arrive at
Ponce port on 3 November.
Mr. Upton. Did the Corps have any advance knowledge of
working with PREPA prior to the contract that they established
with Whitefish and Cobra? Were you aware of that contract
before it was signed?
Mr. Alexander. No, sir, we were not. We were engaged in our
temporary power mission under the Stafford Act, and we have
been working that since the 6th of September. The news that
PREPA had independently committed in a contract to another
company, we were not consulted; we were not aware.
Mr. Upton. You indicated in your written testimony that the
temporary housing plan includes establishing--this is as it
relates to Texas--20,000 travel trailers and 4,000 mobile
housing units. I presume that most of those are for folks that
were actually displaced, homeowners or families that were
displaced. Do you know what that number is for Puerto Rico?
It's 20,000 for Texas. Do you know what the number would be for
Puerto Rico?
Mr. Alexander. No, I do not, sir.
Mr. Upton. Ms. Hoffman, I have met with a number of
pharmaceutical/medical device companies, many with very large
operations in Puerto Rico. We are all aware of the critical
need to get those facilities back online. It is a public health
priority because it is so critical for patients to ensure that
their products that are being manufactured there don't go into
a shortage. How are you incorporating medical manufacturing in
an approach to restore the grid in Puerto Rico?
Ms. Hoffman. So, thank you.
Critical infrastructure, critical loads on an electric
system is very important, utilities. In our conversation with
the utilities, with FEMA and the interagency partners, we
discussed what are some of those priority restoration efforts
and helping with the communications, so that we understand
where some of those needs are and where some of the activities
should be with respect to restoration processes. So, those
coordinations occur with FEMA and with the local utilities in
the Territory itself.
Mr. Upton. OK. Thank you. My time has expired.
I recognize the ranking member of the subcommittee, Mr.
Rush, for 5 minutes.
Mr. Rush. I want to thank you, Mr. Chairman.
Mr. Alexander, I am kind of curious, not ``kind'', I am
very curious about your Army Corps of Engineers' lack of
information about this Whitefish contract. You, the Army Corps
of Engineers, were unaware of this contract, is that correct?
Mr. Alexander. Yes, sir.
Mr. Rush. The Governor says he was unaware of this
contract.
Mr. Alexander. I'm sorry, sir, did you say----
Mr. Rush. The Governor of Puerto Rico has stated publicly
that he was unaware of this contract.
Mr. Alexander. The Governor of Puerto Rico said he was
unaware?
Mr. Rush. Right.
Mr. Alexander. Sir, I am not privy to that. I do not know.
Mr. Rush. Are you aware that this contract is being
canceled or has been canceled?
Mr. Alexander. Sir, I understand that the Governor has
given the direction to terminate that contract. Whitefish and
other contractors, they are completing the task, the last task
they have been assigned. So, they are still working on the
island.
Mr. Rush. Do you have any information about who executed
that contract?
Mr. Alexander. No, I do not.
Mr. Rush. Do you trust PREPA? Do you trust them?
Mr. Alexander. Sir, I have no reason not to. Again, we are
working in collaboration with them on restoring the power.
Mr. Rush. Do you have any estimate in terms of how much
additional dollars the cancellation of this contract will cost
the American people?
Mr. Alexander. No, I do not.
Mr. Rush. All right. Secretary Hoffman, the economic
consulting firm Rhodium Group concluded that Maria cost 1.25
billion hours of electricity supply disruption to households,
which they say is the longest disruption in recorded history.
Do you concur with their finding?
Ms. Hoffman. I will have to look at the information, but it
is a significant duration for outage for Puerto Rico.
Mr. Rush. And what is the best estimate on when power will
be fully restored to both the U.S. Virgin Islands and Puerto
Rico?
Ms. Hoffman. So, that is information that the Governor as
well as PREPA is looking at, as well as partnerships with the
Army Corps of Engineers, on the supplies that are needed, the
resources that are required for restoring power. Some initial
indications are that for, I would say 50 percent--I believe the
Army Corps has estimated that 50 percent of the island will be
restored by the end of December, and that the significant
portion of the restoration will occur later on.
Mr. Rush. Mr. Alexander, can you give us some insight on
your opinions about the timeline, the estimated timeline? There
might be some others on the panel that might also have some
idea about the estimated timeline for Puerto Rico and, also,
the U.S. Virgin Islands.
Mr. Alexander. Sir, as for Puerto Rico, we estimated 30
percent of the prestorm load on the grid would be restored by
30 October. We did achieve that metric on time before the 30th.
I believe we are up over 31, 32 percent today. Our estimate is
50 percent prestorm load restored by 30 November. And then, as
we go on into the new year, we are estimating 75 percent by 31
January.
Mr. Rush. Anyone else want to add?
[No response.]
All right. Mr. Alexander, is the Corps currently involved
in discussions with PREPA, or any other Government entity in
Puerto Rico, to ensure that when the grid is repaired, it will
meet construction--it will be a way to account some of the
lessons learned from this ongoing catastrophe for the American
taxpayers' dollars are not being wasted?
Mr. Alexander. Sir, we are focused on executing the mission
we have been assigned, which is the restoration of the grid to
prestorm conditions, the load, and we are coordinating with
PREPA as we do that. We actually, though, are working with the
Department of Energy on what a more resilient grid might look
like, as they lead the effort to develop recommendations and
cost estimates. But, for now, we are executing our mission
under the Stafford Act, which does not allow for any permanent
construction or enhancement of the existing grid.
Mr. Rush. I yield back, Mr. Chairman.
Mr. Upton. The Chair will recognize the vice chair of the
subcommittee, the gentleman from Houston, Texas, Mr. Olson.
Mr. Olson. I thank the Chair.
And welcome to all five witnesses. A special pony up to the
new chairwoman of the PUC of Texas, Ms. DeAnn Walker. My
daughter Kate is a junior at SMU, your alma mater, and she
loves it.
My first two questions are for you, Mr. Alexander, one
about Harvey and one about Irma. First of all, Harvey. As you
know, sir, I live in Fort Bend County, Texas. When Fort Bend
floods, it floods. We have had four major floods in the past 3
years. Our drainage district works hard 24/7, 365, to make sure
our drainage ditches are maintained. After the first major
flood in 2015, the Army Corps told our drainage district they
need a Section 404 permit under the Clean Water Act to maintain
the ditches. The maintenance of a drainage ditch is supposed to
be exempt from the permitting process under Section 404. But
the Corps disputed the exemption and referred the district to
the EPA. The EPA agreed it is maintenance work and the county
should be good to go. But here we are, 2 years and four floods
later, with Fort Bend County still unable to fix this critical
problem. And now, Harvey has made a bad problem much, much
worse.
These repairs can't wait. Texas and Fort Bend need to
rebuild after Hurricane Harvey. Things are being made worse
with erosion and piles of silt. We don't need red tape at the
Corps hindering the maintenance project that should be exempt
under Section 404(f)(1)(C) of the Clean Water Act.
My question is, will you guarantee me that your office will
work with my staff and local Fort Bend County officials, under
Judge Bob Hebert, to get this fixed ASAP, so Texans can protect
their livelihoods?
Mr. Alexander. Sir, thank you. I acknowledge your concerns.
I am generally aware of this issue in Fort Bend. While I do not
have all the specific details here with me today, I can assure
you and can guarantee you that the Corps remains committed to
working with our partners and your office to resolve this
issue.
Mr. Olson. Great. ASAP, please.
The next question about Hurricane Irma that follows up on
comments and questions from my colleague from Illinois, Mr.
Rush. Sir, have you ever talked to someone on the ground in
PREPA? Have you, yourself, talked to someone on the ground
PREPA about the situation in Puerto Rico?
Mr. Alexander. No, sir, I have not.
Mr. Olson. Wow, have not. OK.
The second round of questions is for you, Ms. Walker. First
of all, I want to thank you for your service to our State. I
appreciate your work in guiding us through Harvey. And I know
Drew Vincentchild at the PUC. You have been our PUC Chair for
41 rather intense days, I do believe. And as you know, for a
city like Houston, I want you to talk about how Harvey as being
a storm event with heavy rain as opposed to wind and storm
surge, and how does that change the impacts you have to
address? And what was the biggest surprise you had to recovery?
Can we help with that surprise to mitigate that, either DC or
NGOs? How can we address your concerns/surprises after
Hurricane Harvey with our grid there in Fort Bend County,
Texas?
Ms. Walker. Well, as you noted, wind damage is very
different than flooding damage, and Houston did have the
flooding damage during this hurricane. The biggest surprise was
the amount of rain. There was substations such as Memorial
substation that took on water that had never taken on water in
the 50 years that it had been there. And so, we were having to
come up during the storm with ways to address all of the
flooding, moving crews. Frankly, they were using aquatic
equipment that they had never used before to get to things
because of the flooding.
Houston, also, downtown experienced heavy flooding. I
believe I heard that 83 of the downtown buildings lost power,
and I think some still are without power. Luckily the medical
center did not. We have reinforced the medical center time and
time again since Hurricane Allison. It wasn't a hurricane, but
since Allison.
And so, I am not sure of anything that you all can pass
here that would help us. We continue to learn from each storm.
Each storm is different. Hurricane Ike was a wind event. It
took, out of 2.2 million, it took out 2 million. It was a much
different storm.
Mr. Olson. Again, being a Member who lives in the area, I
have to thank you so much because, when Harvey hit my house
twice in two days, we never ever, ever lost power. So, thank
you for that.
I yield back.
Ms. Walker. Thank you.
Mr. Upton. The Chair recognizes the ranking member of the
full committee, Mr. Pallone.
Mr. Pallone. Thank you, Mr. Chairman.
Obviously, in addressing the panel, I have to say it,
express my concern that the Federal response so far is nowhere
near where it needs to be. Reports indicate nearly 70 percent
of Americans on the island are without electricity. The New
York Times recently described the situation of Puerto Rico,
quote, ``like going back in time''. Most of my questions are of
Mr. Alexander and the Corps.
Mr. Alexander, who is in charge of the effort to restore
power in Puerto Rico and the Virgin Islands? Is it the Army
Corps or another agency?
Mr. Alexander. Sir, again, our mission assignment from FEMA
is to restore the grid to prestorm condition in coordination/
collaboration with PREPA.
Mr. Pallone. That is fine. I just wanted to get----
Mr. Alexander. OK.
Mr. Pallone. You answered my question.
Is there a strategic plan for these Federal restoration
efforts?
Mr. Alexander. Sir, if you look at strategic beyond the
prestorm restoration, that is being looked at by Energy and
other departments and the interagency----
Mr. Pallone. So, the DOE is more responsible for a long-
term plan, is that what you are saying?
Mr. Alexander. For full, permanent grid restoration
enhancement, yes, sir.
Mr. Pallone. And you are more involved in trying to get
things up and going?
Mr. Alexander. Sir, we are involved in trying to restore
the grid in different sectors as expeditiously as possible with
concentration initially on San Juan and, then, out to seven
larger municipalities on the island, and then, finally,
preparing and transitioning to PREPA for permanent service.
Mr. Pallone. All right. Now how many companies--yes, I
understand the Corps has several contracts with private
companies for restoration work--how many companies has the
Corps contracted with to perform the grid-rebuilding work in
Puerto Rico?
Mr. Alexander. Sir, we have contracted with three
companies.
Mr. Pallone. And will the Army Corps provide the committee
with copies of those contracts, so that we can get an
understanding of their scope? Would you be willing to do that
through the chairman?
Mr. Alexander. Sir, I will have to speak to our contracting
authority and see what is permissible because it is
acquisition-sensitive material.
Mr. Pallone. All right. If you can, we would appreciate it.
I know I am acting through the chairman in asking you for it.
We have heard varying reports as to how long it will take
to restore power to the citizens of Puerto Rico. By some
accounts, it will be many more months until power is fully
restored. So, Mr. Alexander, when did the Army Corps receive
its mission to repair Puerto Rico's grid from FEMA?
Mr. Alexander. On 30 September.
Mr. Pallone. And Hurricane Maria made landfall in Puerto
Rico on September 20th. Do you know why it took FEMA 10 days to
give the Army Corps its mission?
Mr. Alexander. Sir, we were not involved in deliberation.
We were executing our temporary emergency power at that time.
Mr. Pallone. All right. Just on that issue, does the Army
Corps mission assignment provide--well, I guess you did answer
that. You basically said, if I understood, that the short-term
repairs in San Juan and these other areas is under your
jurisdiction, but the long-term and fully reconstruction of a
more efficient and resilient grid, that would be more DOE,
correct?
Mr. Alexander. Yes, sir.
Mr. Pallone. All right. So, then, let me turn to Ms.
Hoffman, to the DOE witness. If the Army Corps is not
responsible for making long-term improvements, is the DOE
taking the lead on this effort?
Ms. Hoffman. So, the Department of Energy is looking at
strategies for long-term improvements with respect to
strengthening the grid. So, ideas such as energy storage,
microgrids or minigrids, options for rerouting power, better
situational awareness, all those activities are activities that
we are looking at. But, once again, the actual financing and
implementation is the responsibility of the utilities or the
governance structure that will be decided for Puerto Rico.
Mr. Pallone. But you stated in your testimony that DOE is
leveraging the National Labs to develop long-term solutions to
improve resiliency. What is the status of that effort?
Ms. Hoffman. So, the National laboratories, we have been in
active discussion with the Grid Modernization Lab Consortium in
looking at areas such as planning activities, situational
awareness, looking at analysis-type activities, as well as
hardening activities. What this is going to have to be done as
is mirrored up with the existing rebuilding process and looking
at how some of the innovative solutions can be married in and
built upon the existing rebuilding. So, that is going to take
time and it is going to have to run in close coordination. So,
we have seven technical experts in Puerto Rico working with the
Army Corps to understand the timing and the extent of where
their activities are going and opportunities for the future.
Mr. Pallone. All right. Thank you so much.
Thank you, Mr. Chairman.
Mr. Upton. The Chair will recognize the gentleman from
Illinois, Mr. Shimkus.
Mr. Shimkus. Thank you, Mr. Chairman.
I want to try to go to three different directions real
quick. But, Mr. Alexander, I am a former military officer.
Someone has to be in charge. So, I think it is very troubling
that we have you all there trying to restore the grid and you
are not in consultation with PREPA. The basic question is, if
you are going to call and yell at someone to get the job done,
does anyone know who we are going to call? Mr. Alexander?
Mr. Alexander. Sir, my job is really----
Mr. Shimkus. Yes, you have been very good at trying to
answer this tactfully. But who do we call?
Mr. Alexander. FEMA.
Mr. Shimkus. We call FEMA?
Mr. Alexander. FEMA.
Mr. Shimkus. OK. Do we get our answer?
Mr. Alexander. It is the authority we are operating under.
And I will say this: from our Chief of Engineers to our
South Atlantic Division commanding general, and to a number of
colonels that are on the ground in Puerto Rico, they
collaborate and meet with PREPA on a daily basis.
Mr. Shimkus. OK. Thanks. So, I think we probably should
have FEMA here. That is who we should have had, FEMA, as far of
this committee hearing. So, maybe we will do that as a
followup.
Because, obviously, we all know the history behind PREPA
and the bankruptcy and their questionable practices and their
ability even to provide power before the storm.
Does anyone know why it took--and Puerto Rico is separate
because it is an island; it is far away; it is hard. Other
States usually have, with the utilities have mutual assistance
agreements. And you will see folks flow. Does anyone know if
PREPA had a mutual assistance agreement with any stateside
utility? Does anyone know that?
Ms. Hoffman. It is my understanding that PREPA had not
asked for mutual assistance agreements. Early on in the storm
they just did ask for it.
Mr. Shimkus. Yes, I have been told it took five weeks,
PREPA took five weeks to ask anybody for help.
Ms. Hoffman. Yes, a letter was submitted two days ago, I
believe, for mutual assistance. But, generally, the industry is
very forward-leaning in discussing with the utilities and
activating mutual assistance----
Mr. Shimkus. Well, we see it all the time.
Ms. Hoffman. Yes.
Mr. Shimkus. I mean, the trucks are on the road, whether
there is an ice storm, whether there is in my neck of the woods
a tornado, whether it is hurricanes. I have members of my
congregation who are utility workers, and they are gone. That
is a disappointing statement.
I also wanted to put on the record, I think we wanted the
Nuclear Regulatory Commission to submit a letter for this
hearing because the hurricanes did come through some of our
locations where we have nuclear power plants, and we think that
would help build the record of the resiliency, baseload power,
the importance of that. And I would ask that, if we finally get
a letter from the NRC, Mr. Chairman, that we are allowed to
submit that for the record.\1\
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\1\ The information has been retained in committee files and also
is available at http://docs.house.gov/meetings/IF/IF03/20171102/
106573/HHRG-115-IF03-20171102-SD010.pdf.
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And the last point, I really want to go to Mr. Rusco and
maybe Mr. Corbin. The crude oil world has changed significantly
since the establishment of the SPRO. I have been here a long
time, 20 years, and I think one thing is for sure: we have
always bought high and sold low. Is that a safe statement in
the history of the SPRO, in the purchase of crude oil? Mr.
Rusco, do you want to answer that?
Mr. Rusco. I think that, just by the nature of when it was
established, you know, it was established after a crisis.
Usually, when DOE has had authority to expand, it is----
Mr. Shimkus. Quickly.
Mr. Rusco [continuing]. After a crisis. And so, it has been
at higher prices.
Mr. Shimkus. So, we have a history of buying high and
selling low?
Mr. Rusco. At least buying high.
Mr. Shimkus. And your testimony talked about refined
products. In the world really now the need is for immediate
refined product, not base crude oil. In the old days when we
were worried about deploying forces to Europe and sea lanes
being closed, and importation of crude oil, a SPRO made sense.
Am I right, based upon your testimony today, that you are
saying maybe regional systems--well, actually, regional systems
which DOE was supposed to analyze, and that there would be more
focus on refined product?
Mr. Rusco. I think that it is fair to say that most other
countries that have strategic reserves have chosen to do that,
for the reasons that you state, yes.
Mr. Shimkus. Thank you. I hope my colleagues will follow up
on some of those questions. I have run out of time. I yield
back.
Mr. Upton. The Chair recognizes the gentleman from
California, Mr. McNerney.
Mr. McNerney. Well, I thank the chairman, and I thank the
witnesses this morning.
Mr. Alexander, you mentioned prevention as a part of the
mission. Within the Stafford Act framework, can the electric
structure of Puerto Rico be rebuilt to improve grid resilience
and using sustainable technology?
Mr. Alexander. Sir, the Stafford Act allows us to restore
the grid to prestorm conditions, meeting U.S. Code, electrical
code, in order to satisfy life, health, safety requirements.
Some have interpreted that to mean we are making a more
resilient or betterment on the system, but that is not the
case.
Mr. McNerney. OK. Ms. Hoffman, has there been a credible
estimate of the cost difference between rebuilding a system
that is resilient and just rebuilding the old system to look
like it did before?
Ms. Hoffman. There has not been a complete cost estimate,
taking into consideration the amount of work that has been done
and that is being planned to be accomplished from the Army
Corps of Engineers. So, there has been discussion around
different advanced solutions, but that needs to be baselined
with the work and the building planout. So, that needs to be
evaluated still.
Mr. McNerney. So, it could be that building a system that
is resilient and sustainable wouldn't cost much more than just
rebuilding the old system up to code?
Ms. Hoffman. I think the analysis has to be completed.
Mr. McNerney. OK. Thank you.
The Office of Electricity has worked on a State Energy Risk
Assessment Initiative that helps States understand the risks to
their infrastructure. Did the Virgin Islands and Puerto Rico
have a risk profile before the hurricanes?
Ms. Hoffman. I would have to go back and look into that. I
am not sure whether they did do a risk profile with the State
assessments.
Mr. McNerney. Thank you.
Mr. Stafford, is it true that the National Science
Foundation facility at the radiotelescope has an infrastructure
that supported FEMA operations subsequent to the hurricane?
Mr. Shimkus. You said ``Stafford''.
Mr. McNerney. Oh, Mr. Alexander? Excuse me. Thank you, my
colleague from Illinois.
Go ahead.
Mr. Alexander. Sir, now that I know it was me you were
talking to, could I ask you, please, to repeat the question?
Mr. McNerney. Sure. Is it true that the National Science
Foundation facility radiotelescope infrastructure survived well
enough to serve as a FEMA operations center?
Mr. Alexander. Sir, I am not aware of that.
Mr. McNerney. OK. I was going to ask you what
differentiated that facility that survived from facilities that
did not survive. Does anyone have a clue to that question?
Mr. Alexander. I do not.
Mr. McNerney. No?
Ms. Walker, you highlighted the inconsistencies in tracking
outages in the system. Would better tracking of outages be
beneficial? Or how would it be beneficial?
Ms. Walker. It helps us determine where to deploy services,
such as, we call them pods, but water, food, whether or not
outages are going to be restored quicker, and we know how many
in the area have outages. We are able to, then, deploy the
needs for that community better with that knowledge; also,
working with the Corps of Engineers on deploying temporary
generators. It just helps us to understand where to deploy for
those needs.
Mr. McNerney. Do you have the authority to require
utilities to report outages?
Ms. Walker. Yes, we do.
Mr. McNerney. Is that authority a State authority or is it
a Federal authority?
Ms. Walker. It is a State.
Mr. McNerney. Thank you.
Ms. Hoffman, how does the DOE go about helping utilities
prioritize which lines, substations, and so on, should be put
online first?
Ms. Hoffman. So, thank you very much for the question.
The utilities have a restoration plan as they look at their
outage management system. They look at prioritization for
transmission lines to get the most customers on as soon as
possible and, then, work down into the distribution system. But
they first must do damage assessments and assess really the
extent of the damage on the system, and accelerating that
damage assessment really helps a utility outline the
restoration process.
What the Federal Government does is look at where the
critical infrastructure is and are there any special needs with
respect to storing large loads or storing critical
infrastructure, whether it be telecommunication facilities,
hospitals. And so, that is an ongoing discussion. But it gets
melded with a utility's restoration plan and the utility's
commitment with respect to how they are doing the restoration.
Mr. McNerney. I yield.
Mr. Upton. The Chair recognizes the gentleman from Ohio,
Mr. Latta, for 5 minutes.
Mr. Latta. Well, thanks very much, Mr. Chairman, and for
calling this hearing today. And thanks to our witnesses for
being here.
Ms. Hoffman, if I could ask you my first question, you
noted that one of the reasons for the rapid electrical recovery
in Florida was the nearly $3 billion in grid resiliency
improvements since 2006. Could you elaborate as to what those
improvements were, and will DOE be working with Florida going
forward to identify additional hardening practices?
Ms. Hoffman. So, thank you, sir, for the question.
The investments by Florida really have stimulated from
activities that looked at, first, situational awareness, so
looking at advance meter and infrastructure to provide the
situational awareness that we have been talking about. Because,
once you have that awareness, you can do an outage management
system. You can actually look at how you can advance and
preposition crews for a restoration process. It also has
allowed for advanced switching to be able to minimize the
amount of customers without power; versus taking down a whole
feeder system, you can really isolate damage on a system and
look at restoration opportunities.
Other things that the utilities have done is hardening
their infrastructure by looking at stronger poles, looking at
concrete poles, steel poles, versus your traditional wooden
poles. But all these capabilities are pulled together with an
advanced kind of communications and control system, but a
situational awareness system that can help with the restoration
process.
Mr. Latta. OK. You are talking about the different types of
poles. Are there other things that they were doing on
hardening, did you say?
Ms. Hoffman. So, with respect to substations--and this
would probably go more for Sandy, but also looking at hardening
substations and being able to----
Mr. Latta. And how do they go about hardening the
substations?
Ms. Hoffman. Pardon?
Mr. Latta. How do they go about hardening the substations?
Ms. Hoffman. So, when hardening the substations, you really
look at increased capabilities with respect to duration, being
able to support prevention of damage from wind, but also from
flooding. So, it goes back to supporting infrastructure, so
that you don't see the flooding damage that can occur.
Mr. Latta. OK. Thank you.
Ms. Walker, if I could turn to you, can you elaborate on
working with the Federal agencies after Hurricane Harvey? And
could you see any improvements that need to be made between
Federal, State, local, industry, all working together out
there? Or what is your view as to what happened, and is there
anything that can be improved on?
Ms. Walker. I think there are improvements that we can
make. My view is that the time to make those is before the next
storm. I found myself in the State Operations Center addressing
issues that I think are better to try to handle after the storm
and get ready for the next one. Some have to do with the
interconnection for the FEMA temporary housing. Some had to
do----
Mr. Latta. Could you elaborate on that, on the temporary
housing, because I know I've seen different press reports on
that, but would you elaborate on the temporary housing of FEMA?
Ms. Walker. Once they bring in temporary housing, it is not
set, usually, right at the meter that the house is on. So, the
utilities have to set a new pole. There are processes in Texas
for each utility, and my guess is throughout the country for
each utility, on how those processes are to interconnect the
new customer, a new facility.
And we would like to streamline that for all utilities in
Texas. We had five major utilities impacted by Harvey and,
then, multiple coops and municipalities. And so, we are hoping
to have one process for FEMA to have to go through, instead of
multiple different processes. So, that is an example.
Mr. Latta. OK. Any other examples you can think of that
would be how to improve things out there?
Ms. Walker. We understood, or I understood, during
Hurricane Harvey that there were issues, chokepoints, as they
were called during Hurricane Ike, related to the processes,
inspection processes, for cities to get homes reconnected once
they are rebuilt, once they are remodeled. And so, I think that
is something we can address going forward, how those
inspections are done, who does them, to make sure we have
enough people on the ground.
It was during recovery. It is not, to me, the time to try
to be addressing things like that. And I just think that that
is something we can look at going forward.
Mr. Latta. OK. Well, thank you very much, Mr. Chairman. My
time is just about expired, and I yield back.
Mr. Olson [presiding]. The gentleman yields back.
The Chair now calls upon the gentleman from Pennsylvania,
Mr. Doyle, for 5 minutes.
Mr. Doyle. Thank you, Mr. Chairman.
Ms. Hoffman, welcome back to our committee. It is always
nice to have another Penn-Stater here at the committee.
Let me ask you, in your testimony you explained DOE's role
in restoration and recovery efforts in those areas affected by
recent hurricanes. A DOE piece from 2015 published in Power &
Energy Magazine that is still on your energy.gov site explained
that, and I quote, ``Both the frequency and intensity of these
disaster events have been trending higher in recent years, with
7 of the 10 costliest storms in U.S. history occurring in the
last 10 years. These weather disaster events represent one of
the most significant threats posed by climate change.'' Now
that was published in 2015. And since that time, we have
witnessed the most extreme month of hurricanes that has ever
been recorded earlier this year.
So, I want to ask you, how is the Department of Energy
responding to this increasing threat of climate change and
extreme weather events?
Ms. Hoffman. So, the Department of Energy is looking at all
hazards, including extreme weather, as we look at investment
opportunities or research opportunities for advancing our
electric grid. And so, a lot of our research focuses on
advanced technologies, energy storage capabilities, advanced
minigrids or microgrids, as they are called. We are looking at
advanced capabilities that the utility industry can build and
invest in for hardening and improving the infrastructure.
Mr. Doyle. Yes, I mean, exactly. In fact, that article goes
on to detail the SmartGrid R&D Program which is designed to
improve grid resilience and, also, modernizing the grid through
the adaptation and integration of advanced technologies.
So, in your testimony you explain your recommendation for
the rebuild as being formed in consultation with the National
Labs. And a presentation from my NREL earlier this year
explained the importance of distributed generation, calling it
``a large factor in developing resiliency with clean energy
technologies and solutions''.
So, my question is, is the Department, in making
recommendations to those that are helping rebuild the grid in
Puerto Rico, which will essentially be a brand-new system, are
you urging deployment of distributed systems and renewables?
Ms. Hoffman. So, distributed generation, combined heat and
power, which is probably the most efficient form of distributed
generation, is an option that should be considered in any sort
of restoration improvement process. But one of the things that
we are going to have to think about moving forward is how are
we going to repair systems if another emergency happens. As you
look at Puerto Rico, which had, I believe, over 8,000 solar
panels there, what is the process in which the Department of
Energy and the restoration activities in the next event, how
are we going to orchestrate the repair of those systems?
As you look at an efficient restoration process, there is
an advantage to restoring the core electric grid. So,
microgrids might a good balance between the two of looking at
siting generation closer to load, but I think it has to be an
individual evaluation with respect to the state of the system
and the opportunities from that point of view.
Mr. Doyle. Thank you.
Let me just ask anybody on the panel, does anyone have a
comment regarding FEMA's resistence to authorizing
reconstruction aid? My understanding is this makes local
governments and local utilities ineligible for long-term
grants. And I am also concerned, because Puerto Rico is only
eligible for emergency services, that these contracts don't end
up following Federal procurement rules and we end up with
situations like Whitefish Energy. Has any of your agencies
weighed in on this topic? Is there an expected timeline for
action on this? Anyone?
[No response.]
I mean, FEMA authorized in 10 days in Houston, in Texas,
and I believe in a couple of weeks in the Virgin Islands. But,
yet, still, for some reason, this hasn't been fully authorized.
They claim they are working on it; they are close to it. Could
anyone explain what this holdup is and why it has taken so
long?
[No response.]
I think you are right when someone said we should have had
FEMA up here. FEMA should be sitting on this panel, too,
because it seems like a lot of the questions we have need to be
answered by them.
Well, let me ask it. Do any panelists have suggestions for
any highly beneficial action we could take to help expedite the
rebuilding efforts in a prudent, sustainable manner? Can you
give any suggestions to this committee on what we should be
doing that we are not doing right now?
Ms. Hoffman. Sir, if I may add some comments?
Mr. Doyle. I am glad to see Penn State stepping up to the
plate here and at least answering a question.
[Laughter.]
Ms. Hoffman. As we look forward to investing in resilience,
I know it is something that the Administrator of FEMA is
looking at, as well as the Department. It is, how do we build
in resilience and how do we think about that upfront investment
ahead of a disaster, and looking at what funds are available,
to really think about investing for resilience?
Mr. Doyle. The idea that our citizens are going to go
another three months without electricity is just
unconscionable, I think.
I yield back.
Mr. Olson. The gentleman yields back.
The Chair now calls upon the gentleman from Ohio, Mr.
Johnson, for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman.
I appreciate the opportunity to ask of this panel. A very,
very important hearing that we are having today because we saw
the effects of the hurricanes and how the destruction that
occurred during and afterwards, how that affected not only the
areas that were hit, but other regions of the country as well,
since so much of our energy resources reside there on the Gulf
Coast.
So, Mr. Corbin, how much does the Northeast Gasoline Supply
Reserve cost on an annual basis? Let's get that question out of
the way first.
Mr. Corbin. Thank you for the question, Mr. Johnson.
For the Northeast Gasoline Supply Reserve, the average
storage contracts, which are for leased commercial storage for
the product, are approximately $19.60 per barrel per year. And
when you include overhead costs, to include quality assurance
and administration of your IT/sales platform, in the event you
have to release the gasoline, it comes to a little over $20 per
barrel per year, sir.
Mr. Johnson. OK. So, is the higher per-barrel cost of
storing gasoline versus crude oil a good use of taxpayer
dollars, do you think?
Mr. Corbin. That is really not for me to decide, whether
that is a good use of the taxpayer dollars.
Mr. Johnson. But you have got an opinion?
Mr. Corbin. I will say, Mr. Johnson, that in terms of the
cost of storage for refined products, the United States has,
out of 14 countries that participated in benchmarking studies
that are stock-holding countries, the U.S. has by far the
highest cost for gasoline storage out of the 14 countries.
Mr. Johnson. OK. All right.
Also, Mr. Corbin, continuing on, the SPR is almost entirely
located in the Gulf Coast region of the United States, limiting
its ability to respond to disruptions in other parts of the
country, particularly if we were to have a repeat of what we
saw recently. For example, the West Coast has relatively few
pipelines that are connected to the SPR, meaning that some
petroleum products must be shipped by truck, barge, or other
domestic methods or by tankers even from foreign countries.
These modes of transport, obviously, are slower and more costly
and limit the usefulness of the Strategic Petroleum Reserve.
So, how would expanding, in your opinion, how would expanding
the number of SPR locations across the country enhance the
effectiveness of the SPR?
Mr. Corbin. First, I would just like to make a correction
to your statement, sir. There are no pipelines that directly
connect the SPR to the West Coast of the United States.
The SPR, as I mentioned in my testimony, our crude oil is
stored in underground salt caverns in two sites in Texas, two
in Louisiana. Salt cavern storage is very inexpensive. We have
the lowest operating cost of any stock-holding country in the
world for our crude oil. There are no salt domes along the West
Coast of the United States. There are some outside of the
immediate Gulf Coast area, but they are not significant. So,
crude oil storage would be problematic on the West Coast.
Mr. Johnson. So, you are basically saying--I don't mean
just the West Coast; I mean other regions of the country as
well. I mean, the question centered on the West Coast. So, you
are saying, in your opinion, developing other storage areas for
the SPR around the country in different regions would be
problematic?
Mr. Corbin. For crude oil storage. Now, in discussions that
were mentioned by Mr. Shimkus earlier, and talked about refined
product storage, the U.S. Government currently has two refined
products reserves, the Northeast Gasoline Supply Reserve and
the Northeast Home Heating Oil Reserve. They are both very
small, 1 million barrels apiece. They are intended to meet
regional supply disruptions.
There are challenges associated with product reserves,
regardless of the model that is used. Both of the product
reserves that are currently in existence, they are,
essentially, Government-owned refined product in leased
commercial storage facilities. In any product reserve with that
model, there is an initial refined product acquisition cost
associated with it. In studies that we did in PADD 5, which is
the West Coast, and in the Southeast U.S., my staff found that
there is little to no spare commercial storage capacity. And as
I mentioned previously, the leased commercial storage costs are
high.
Mr. Johnson. OK. All right.
Mr. Chairman, I yield back.
Mr. Olson. The gentleman yields back.
The Chair now calls upon the gentlelady from Florida, Ms.
Castor, for 5 minutes.
Ms. Castor. Thank you, Mr. Chairman. And I want to thank
Chairman Upton and Ranking Member Rush, and the professional
staff, for bringing this hearing to be. And thanks to all of
our witnesses.
There is a very serious tension that the Congress has to
address as soon as possible. On the one hand, we need to
restore power in Puerto Rico and the U.S. Virgin Islands as
quickly as possible, but, on the other hand, Congress has an
overarching responsibility to protect the taxpayer from future
losses by building a more resilient, modern, distributed grid
with better technology, technology, by the way, that has
largely been funded by the taxpayers that we see in our
National Laboratories that is used by utilities and businesses
all across the country.
Senator Ramon Luis Nieves, who is in the audience and is
going to testify on the next panel, is a former chairman of the
Puerto Rican Senate Committee on Energy. He says the current
grid is obsolete, the grid before the storm, before the
hurricanes. He said in his testimony, ``Appropriating taxpayer
money just to repair an old 20th century grid would be a waste
of resources.'' In fact, Ken Buell, the Director of Emergency
Response and Recovery with the U.S. Department of Energy,
stated that, ``We really should think in terms of rebuilding at
this point, not just repairing the old grid.''
The problem that we have all got to grapple with is PREPA
is largely in debt. They do not have the wherewithal now to
take the lead on this. They have governance problems. Gosh,
what else do we have to know after this Whitefish contract
controversy? I think we have a very significant responsibility
to protect the taxpayers here.
A few weeks ago, there was a congressional briefing
provided by the Department of Homeland Security, FEMA, and the
U.S. Army Corps of Engineers was there. They also relayed that
they only have the authority now to go in and make repairs, and
not do the kind of rebuilding of a modern grid that needs to
happen.
In fact, Mr. Alexander, in your testimony you say that your
mission right now is to repair the power system to its prestorm
condition, is that correct?
Mr. Alexander. Yes, ma'am.
Ms. Castor. Ms. Hoffman, what kind of direction do you need
from the Congress to begin to go beyond a planning stage and do
something that your very own Director of Emergency Response and
Recovery has said needs to be done? And do you agree that you
need that authority to go beyond repairing?
Ms. Hoffman. So, I think there has to be an ability for the
Department of Energy to work closely with PREPA in planning and
actively engaging and discussing what some of those advanced
technologies solutions are. So, the forum has to be codified,
so that there can be active engagement and discussion of what
are the opportunities. I know that PREPA has their own plans
and their own activities, but how do we really take the
advancements and provide that?
Ms. Castor. So, you think, yes, it would be helpful for
Congress to provide additional clarity, so that you can move
forward to do what, on a bipartisan basis, what experts have
advised that needs to be done in Puerto Rico?
Ms. Hoffman. Yes.
Ms. Castor. And the Virgin Islands? OK.
Ms. Hoffman. Yes.
Ms. Castor. We have got to do this with a sense of urgency,
though. Mr. Alexander, how do we do this? As you keep going on
to repair, what kind of advice, what kind of clarity do you
need from the Congress in maybe the next emergency aid package,
maybe in something that would allow you to go beyond just
repairing the old, obsolete grid and moving forward on
something that would protect the taxpayers?
Mr. Alexander. So, while we recognize that the prestorm
grid was not in good condition, the current authorities under
the Stafford Act, and the mission assigned from FEMA, limits us
to restoring to prestorm condition, meaning U.S. Code. I think
this is, ultimately, a policy decision. Do we need to relook at
the Stafford Act? As written, it was----
Ms. Castor. And Colleagues, let me--thank you very much--in
previous emergency aid packages for Superstorm Sandy and for
Katrina, it has been the Congress that has been able to go
beyond the Stafford Act that limits the Government to just
going and repairing what was, and building in, instead, a new
resiliency, whether it is in housing or defense installations
and things like that, those previous emergency aid package. We
have never had a blackout and destruction of an electric grid
the scale of this ever before in the country, and that is why
this is something new this committee needs to work on together
with our colleagues in the Senate and, hopefully, with DOE, as
they have expressed they are already doing some of this
planning. But, to put this into action, it is going to be our
responsibility to actually pass that authorization in the next
emergency aid package or before.
And I yield back my time.
Mr. Olson. My friend's time has expired.
The Chair now calls upon the gentleman from the
Commonwealth of Virginia, Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you very much, Mr. Chairman. I
appreciate it,
Ms. Hoffman, during a hearing before this committee,
Secretary Perry mentioned that microgrids could be a solution
to quickly restore electricity after future natural disasters.
I am also interested in how microgrid technology could be used
to provide power to rural and rural mountainous areas of the
country. Do you believe Puerto Rico could benefit from
microgrids and, if so, how?
Ms. Hoffman. So, thank you very much for the question.
Microgrids provide an opportunity to bring generation
closer to the load and be able to manage supply and demand on a
more local basis. In Puerto Rico you have the generation on one
side of the island and, of course, the load on the other side
of the island. So, ultimately, you really would like to be able
to create a minigrid or a microgrid. It would be able to
balance that in a different form. But that does require
generation, and it does require load management and advanced
communications and controls to be able to manage that on a more
localized basis. So, you look at things such as energy storage
and other generation that can be meshed very well with a local
distribution system.
Mr. Griffith. Now would you see that as exclusive of the
current type of system or would you see it as an ancillary
except in times of disaster?
Ms. Hoffman. So, ideally, I would love to think about how
you build off of the existing system and capitalize on the
existing investment, where it is electrically feasible. And
then, once again, that requires close coordination with the
existing infrastructure. Whenever utilities look at isolation
or separation of the grid and look at microgrids, they are
looking at utilizing the existing assets and being able to
build upon those assets with new technology and new
capabilities.
Mr. Griffith. And if you are suddenly cut off, as we have
seen in Puerto Rico, from your supply of either electricity or
the fuel to produce that electricity, doesn't that require that
the microgrid also have some kind of a fuel source that it can
tap into in cases of emergency?
Ms. Hoffman. Absolutely. You need a fuel source. You need
redundancy. You need to be able to ensure reliability of the
microgrid. Whether it is a utility-owned or a private-sector-
owned, you have to have that redundancy and capability for your
customers.
Mr. Griffith. I appreciate that.
What are the current limitations associated with the
microgrid technology, if any?
Ms. Hoffman. So, some of the current limitations are really
looking at microgrid controllers to be able to have an ability
from a standards form to be able to look at control of the
microgrid, looking at cybersecurity. Regardless of who owns the
electric grid and how the electric grid is developed, you have
to be secure. You also have to have the capability to
dynamically manage supply and demand. So, looking at some of
the advanced control solutions and things along those lines, as
well as the generation technology.
Mr. Griffith. Now let me ask you this: can you envision
that a microgrid might be as small as, say, just a power source
that would handle a hospital and its needs or a factor and its
needs for short periods of time, as a part of the system as a
whole, but, then, also, in times of emergency be able to take
care of those needs where we have seen problems in Puerto Rico
and other places?
Ms. Hoffman. So, absolutely. We have seen microgrids at
university campuses, at hospitals. So, it can be as small as
one wants to define a microgrid, but also can be larger from a
minigrid point of view, if you want to support multiple
services in a locality.
Mr. Griffith. And I would assume that, based on what we
have already discussed, that if you had, if for some reason in
the natural disaster your fuel source was damaged, but the rest
of the equipment was still good, that it would be easier to
drop in the fuel, for the Federal Government to come in after
the disaster and drop in the fuel than it would if you drop in
a whole new system, isn't that correct?
Ms. Hoffman. I think that has to be evaluated on a system
basis, to be fair.
Mr. Griffith. OK.
Ms. Hoffman. I mean, you are bringing in a lot of fuel, and
it kind of comes down to what really is it required for a cost-
effective restoration. What we are talking about is getting the
power back on for as many customers as possible as efficiently
and as effectively as possible. And so, in some cases that may
be putting in, re-establishing a grid system and a grid
network. In other cases in a localized community that is very
far and isolated, it may be putting onsite generation there and
creating a minigrid in the near term until lines and power can
be restored from a main grid point of view.
Mr. Griffith. And I appreciate that. Of course, in my neck
of the woods where we have a lot of coal and some natural gas,
but a lot of coal, we think that might be an answer for us, and
maybe for others, to have that fuel source available and have
the big microgrid ready to go.
With that, Mr. Chairman, I appreciate it very much and
yield back.
Mr. Olson. The gentleman yields back.
The Chair now calls upon the gentleman from Iowa, Mr.
Loebsack, for 5 minutes.
Mr. Loebsack. Thank you, Mr. Chair.
Thanks to the panel today for your excellent testimony, and
we have had a lot of great questions.
I guess I want to join in with everyone else in expressing
the fact that I was heartbroken by the devastation of these
most recent storms. I think it is unfortunate that we are
probably going to see a lot more of this down the road. So, we
are going to be faced with these issues, I think, across the
country.
And many of us represent districts that have already been
affected over the years by this kind of devastation. I
represented Cedar Rapids, Iowa, for 6 years. Back in 2008, we
had the Flood of the Century or the flood of whatever number of
centuries, and the river crested at 31 feet, 9 feet over the
previous record. There was $2.5 billion damage done immediately
in Cedar Rapids, the economic loss of probably the same. And
they have been through a lot, like a lot of communities around
this country, and just most recently what we have seen in
Puerto Rico and Texas and Florida.
I do want to, I guess, address my concerns more to Mr.
Alexander than anybody with respect to the Corps. You know, the
Corps I know ranks the projects, and we are going to have a lot
of projects coming up, what we have seen recently, projects for
reconstruction, for flood mitigation. I run the benefit/cost
ratio, and it has to be at least 1-to-1, as you know.
Cedar Rapids was 1.2-to-1. We authorized the project to go
forward in 2014, but we haven't seen any movement on it in
terms of funding. And this is going to happen in these other
instances, too. We are going to have a lot of challenges, sort
of where to prioritize, where to put the money.
But I have a lot of concerns with this benefit/cost ratio.
It seems awfully bureaucratic to the folks who are living in
these communities when they want to prevent floods in the
future. Can you address that issue and give us any hope at all
that, not just Cedar Rapids, Iowa, but these communities that
are going to be faced with flood mitigation down the road might
get some relief and actually see some projects built?
Mr. Alexander. Sir, I am familiar with benefit/cost ratios
and prioritizing and racking and stacking of projects, and the
needs are many, but the budget is limited. But my focus is on
contingency operations. And so, to adequately address your
question, I would have to refer to our Civil Works personnel.
So, I could have my staff coordinate with them.
Mr. Loebsack. Yes, I suspected that might be the case, but
I am going to go ahead and submit a question on the last. Then,
if you can get us an answer from the relevant person at the
Corps, that would be great. Again, I just want to bring up this
issue more than anything else, because going forward this is
going to cost, as we know, billions of dollars for
reconstruction in these communities. And a lot of them are
going to face the same questions that Cedar Rapids faced since
2008, and a lot of other communities around the country, and it
is something that we are going to have to pay close attention
to and we are going to have to resolve that issue, because
folks are going to be depending upon those reconstruction funds
to make sure that they can go forward with their communities.
So, thanks to all of you.
And thank you, Mr. Chairman. With that, I will yield back.
Mr. Olson. The gentleman yields back.
The Chair now calls upon the patient gentleman from West
Virginia, Mr. McKinley, for 5 minutes.
Mr. McKinley. Very patient, very patient. Thank you, Mr.
Chairman.
Mr. Olson. Very patient.
Mr. McKinley. Mr. Chairman, given the aftermath and all the
discussion here we have had about the natural disasters we have
had in Florida, Texas, Louisiana, Puerto Rico, I really want to
applaud the Department of Energy's efforts to refocus the
narrative and the discussion about reliability and resiliency,
because really it underscored how serious that problem is if we
don't address it. So, thank you for what you are doing, and for
Secretary Perry, for focusing on that, because I think that
could have some impact.
But my question, a little along the same line, has to do
with the petrochemical industry in the Houston and Louisiana,
all of the Gulf Coast, where we were so hard hit when that
Category 4 hit there that it wiped out or shut down 17--I think
there are 23 crackers down in that area--17 of them were shut
down. One of them is still out. Sixty percent of our production
of polyethylene and propylene were lost for a period of time.
It showed how vulnerable we are in that area.
And I know that, in contact with folks that have reached
our office, because of that slowdown, because of the lack of
cracker facilities to be able to provide the ethylene and
propylene around the country, companies all across America that
use their plastic resins are slowing down as a result. One
company, particularly, in my district was working seven days a
week. It is now down to five because it can't get the plastics.
So, this thing is serious about it. What we have done, or
what I think DOE maybe has an interest--and I would like to
hear more from you--is that, rather than taking a page from the
Strategic Petroleum Reserve of having it all in one location,
what if we were to locate an ethane storage up in the northern
Appalachian area, right where the Marcellus and the Utica shale
formations are located, so that we could have a secondary
supply, a secondary source, to be able to provide that, the
petrochemical supplies of material for around the country?
Do you have a thought about that from DOE's position, here
they may be on having a secondary? It is not replacing Houston
by any stretch. It is just having something that is in another
location, so it is not vulnerable to the weather.
Ms. Hoffman. So, Congressman, you bring up an important
issue. It is location, location, location. Diversity is very
important. And as we look at any sort of, whether it is fuel
product, chemical product, having and thinking about having
flexibility in where that product is developed also looks at
our security and resilience for the Nation. So, I understand
that in the Appalachian area there is a lot of natural gas
resources and a byproduct of natural gas and the ability is
ethane. And so, I know that the Secretary had a roundtable
discussion and is looking at the opportunity. But it brings up
the important point that we need to think about diversity and I
wanted to say ``generation diversity,'' but product diversity
in the United States.
Mr. McKinley. Following up on that is that, during last
year's appropriation process, our office had introduced an
amendment to the appropriation bill to see that a study was
undertaken to confirm whether or not there was an interest or
possibility and potential for having it in the Marcellus and
the Utica shale formations. That has been since, I think it was
May. Do you have a sense? Can you give me a status on how far
along, if it has been undertaken yet, to make a determination
of the feasibility of locating a secondary ethane storage?
Ms. Hoffman. So, I understand the Department is undertaking
a study in this area, and it is my understanding that this
study will be completed in 2018.
Mr. McKinley. Do you have an idea when in 2018? In
December or is that going to be in September or October?
Ms. Hoffman. I don't have that.
Mr. McKinley. OK.
Ms. Hoffman. I will get back to you on that answer.
Mr. McKinley. If you could back to me, I would appreciate
it.
And I yield back. Thank you.
Mr. Olson. The gentleman yields back.
The Chair now calls upon the gentleman from the Bay State,
the Bay Line State--I'm sorry--the Old Line State, Mr.
Sarbanes, for 5 minutes. I apologize.
Mr. Sarbanes. All those names work.
Thanks to the panel.
I wanted to ask you, Mr. Alexander, to step back in terms
of the Corps' relationship to these disasters that have been
occurring with more frequency, and give me a sense of how much
the Corps' mission and effort and sort of the deployment of its
various projects has changed over the last few years in either
response to the disasters that we are seeing, these natural
disasters, or in anticipation that the frequency of them is
going to increase. Is that an analysis that is happening? Can
you cite some trends in terms of the Corps' projects around
this, the kind of requests that come in that are related to
resiliency and adaptation, and so forth, in addition to just
efforts to respond to things that happen? So, if you could give
that kind of 30,000-foot perspective, that would be helpful.
Mr. Alexander. Thank you, sir.
First, every year following a storm season, we do an after-
action review and we identify lessons learned, and we work to
develop and establish best practices, so that we can improve
ourselves and train accordingly. How can we work with State and
local governments to help them prevent and work toward
mitigation of a disaster?
We are always looking at how we can improve our critical
infrastructure. We have an aging infrastructure, as you know.
So, that is a separate issue. We acknowledge that
infrastructure needs to be resilient in order to withstand
storms such as this, flooding on the Mississippi, tornadoes out
in the Midwest. We are looking, as we move forward and develop
and study projects and future projects, we are looking at ways
to ensure that a greater degree of resilience is incorporated
in those designs.
Mr. Sarbanes. Are you seeing an increase? Is there a marked
increase or at least something measurable in the kinds of
proposals that are coming into the Corps that relate to these
extreme weather events, either responding to something that has
happened or projects that are anticipating increased exposure
from these events? And has the Corps' kind of scoring system
for projects been adjusted in any way relative to what has been
happening with these kinds of disasters and weather events?
Mr. Alexander. I am not in a position to adequately address
your question. I can say, I mean, we do every year; we have
requests for additional flood damage mitigation projects. How
can we increase the resilience in levee systems and support and
mitigate flooding in low-lying areas, flood plains, things of
that nature?
Mr. Sarbanes. I would appreciate it, if it were possible,
to go back to the Corps, and maybe after the analysis following
this hurricane season has been completed, to see if you could
give us some information about trends over the last few years
in terms of the number of projects that fall into that kind of
a basket and, as I said, whether the Corps is putting that
analysis and thinking into a strategic plan for the Corps going
forward that may lead to creating different sets of priorities
for project based on some of these issues. So, if that is
something, certainly getting that analysis--I assume we can get
some report on the analysis that is done on an annual basis--
that would be helpful, but, then, any additional perspective
you can bring on those kinds of trends would be helpful.
Mr. Alexander. Yes, sir, we will.
Mr. Sarbanes. Thanks. I yield back.
Mr. Olson. The gentleman yields back.
The Chair now calls upon the gentleman from Missouri, Mr.
Long, for 5 minutes. Welcome back, Billy.
Mr. Long. Thank you, Mr. Chairman.
And, Ms. Hoffman, 10 or so years ago, my hometown of
Springfield, Missouri, we received a devastating ice storm
where there were folks out of power for 10, 12 days, two weeks,
whatever, and the utility companies came in from all over to
help us in that situation. I know the recent situation in
Florida, from the Washington, DC, area here in Maryland,
Virginia, and Springfield, Missouri, again sent crews down to
Florida to help in that situation. So, I know what it is like
whenever people--neighbors helping neighbors, so to speak.
You note in your testimony that mutual assistance provided
by electric companies, public utilities, and electric
cooperatives across the country played an important role in
restoring power so quickly in Florida. Could you discuss the
logistics of bringing in as many as 60,000 workers from across
the country to quickly assess and restore, or assess
restoration locations, and how this effort is being coordinated
by industry?
Ms. Hoffman. So, thank you very much for the question. And
I think it is an impressive network, and the aggressive posture
that the utility industry has had, as well as the lessons
learned from Katrina and past events, that the utilities have
really taken it upon themselves to have a leadership position
in developing a mutual assistance network. This is a network
where utilities talk among each other, request mutual
assistance, and it is organized to provide mutual assistance to
utilities that request it. And this is across the United
States. There is different coordination and different entities
that are responsible for a mutual assistance request in
different areas of the country.
The utilities that provide mutual assistance, they talk
about the management structure; they talk about laydown
procedures with respect to equipment and equipment necessary.
And there is a huge coordination with respect to supplies and
the availability of resources.
Mr. Long. OK. What role do State or Federal emergency
operations officials have in monitoring the use of mutual
assistance and to ensure that it is applied to the most
critical areas?
Ms. Hoffman. So, this is real interesting, and I thank you
for bringing up the point. What we deal with is, first and
foremost, the utilities are in a leadership position, as they
should be, for providing response and recovery. The Federal
agency and the Federal Government and the Department of Energy,
what we do is help understand when is it outside the ability of
a utility to be able to manage their response and recovery
efforts, and what are the resources that are required, the gaps
that are needed in providing support. So, whether it is
transportation issues, access issues. And so, that is the
activities that the Department of Energy and the Federal
Government help with. And that is whether it is hours of
service waivers, whether it is weight restriction waivers,
whether it is understanding if there is a priority, whether it
is a heavy load like a chemical facility or a pharmaceutical or
a hospital, what some of those restoration needs are.
Mr. Long. Speaking of the Federal Government, what does the
Federal Government do to remove regulatory roadblocks to
recovery and repair efforts, and are there areas that we can
improve in those?
Ms. Hoffman. So, the efforts that the Federal Government
does and looks at are from a waiver point of view. So, looking
at access to any sort of damaged area, to making sure that the
utilities--I guess where I would go with this answer is I will
be very pointed here. It is that utilities nowadays are very
much seen as emergency responders. Typically, that has been the
health and the safety side of things. But now, as you look at
critical infrastructure and as you look at the needs moving
forward, telecommunications and electricity are primary for
providing an effective restoration process and life and safety.
And so, access for utilities in a damaged infrastructure
environment, being able to be forward-leaning in getting
utility resources there, are absolutely critical as we move
forward. And it is going to be more critical as we look at
onsite generation and being able to restore power.
Mr. Long. OK. Thank you.
And will the Department of Energy be working with the
States and Territories impacted by these recent hurricanes to
assess grid resiliency efforts and identify ways to improve
grid resiliency?
Ms. Hoffman. Yes.
Mr. Long. OK. I wish we had time today for an EMP
discussion with all of you, but perhaps another day. It seems
like our time is taken up today with talking about the Astros
all the time.
Mr. Chairman, I yield back.
Ms. Hoffman. I look forward to future conversations on
that.
Mr. Olson. The conversation is a problem, my friend, about
the Astros? Is that a big problem?
The gentleman yields back.
The Chair now calls upon the gentleman from New York 20,
including the State capital of Albany, Mr. Tonko, for 5
minutes.
Mr. Tonko. Thank you, Mr. Chair.
While we hear about restoration working along in some of
our States, many of our fellow Americans in Puerto Rico and the
United States Virgin Islands remain in the middle of the most
serious blackout in United States history. Restoring services
is absolutely critical, but we also need to acknowledge the
risks of this happening again and the need to support the
development of a more resilient grid moving forward.
Over the last decade, extreme weather and fire events have
cost the Federal Government well over $350 billion, according
to the Office of Management and Budget. A GAO report last week
estimated that these costs will likely rise in the future, due
to the effects of climate change. This is not a choice between
pay now or pay later. It is a pay now by supporting research,
hardening infrastructure, and making meaningful investments to
adapt to and mitigate climate change, or pay now in
multibillion-dollar emergency spending packages. The fiscally
sensible approach is to acknowledge the risk posed by extreme
weather and to make the necessary investments that will
mitigate it.
We just passed the 5-year anniversary of Superstorm Sandy
hitting the Northeast. We have seen a lot of effort in New York
to build a more resilient grid, but the experience of Sandy
shows that rebuilding takes time. And it is clear that lessons
learned from one disaster can make future response and recovery
more effective. We have been learning from Sandy. We are
learning from Harvey, from Irma, and from Maria, and the
learning will continue until we address some of the
preventative measures.
So, Ms. Hoffman, your testimony mentioned that Florida
Power & Light has made major investments since 2006 to build a
more storm-resilient grid. Similar work has been done in New
York State in regard to Sandy. How can a smarter, modernized
grid be more resilient?
Ms. Hoffman. So, thank you, Congressman, for the question.
A smarter grid allows for advanced communications and
controls. It allows for rerouting power. It allows for an
accelerated situational awareness.
So, let's first talk situational awareness and the ability
to have smart meters and you are able to have better visibility
into your system, be able to isolate damage, be able to reroute
power. And so, having that ability allows you to be forward-
leaning on placement of resources, to have a very effective
restoration process, well-planned, well-distributed with
respect to priorities and how a restoration process can be
done.
With respect to being able to reroute power, you can really
look at isolating customers and being able to make sure that
you can restore most of, a large number of customers quickly,
as well as prevent damage to additional customers
unnecessarily.
Mr. Tonko. Thank you.
And, Ms. Walker, can you explain how grid modernization
efforts in Texas, advanced meters, and others, aided in a more
rapid recovery there?
Ms. Walker. Yes, sir. Thank you for the question.
The advanced meter systems that we have--we have them
through most of the ERCOT region--were very helpful. It
notified the utilities of when those customers were out. So,
they knew where those customers were located. It also helped,
as Ms. Hoffman said, in rerouting and knowing where they needed
to send their crews, and being able to reroute electricity to
serve people in a more timely fashion. So, we found that it was
very helpful to have the advanced meter systems and the new
technologies.
Mr. Tonko. Thank you.
And DOE's quadrennial energy review heavily focused on
critical infrastructure interdependencies. I am particularly
concerned by the harrowing statistics of Puerto Ricans without
access to safe drinking water. Water, telecommunications,
hospital, and public safety infrastructure are dependent on
electricity.
So, Ms. Hoffman, is a more resilient grid system, perhaps
one that includes microgrids, distributed generation, and
storage, important for supporting rapid response and recovery
in regard to and in interaction with these other critical
infrastructure needs?
Ms. Hoffman. So, thank you, Congressman.
Using a microgrid in a smart fashion around critical
infrastructure is absolutely important. As you look at
telecommunications, as you look at water and wastewater
treatment plants, it is really how do we harden those areas to
allow for them to either sustain or be able to recover quickly.
And having generation closer to these critical loads, through
the form of a microgrid, is absolutely important. I know that
ConEd and areas in New York are also looking at how do they
harden their infrastructure.
And I do want to say I appreciate NIPA and their efforts in
going down to Puerto Rico as well and supporting the recovery
efforts.
Mr. Tonko. Thank you.
Has there been any interaction with EPA and DOE in regard
to this interdependency on infrastructure?
Ms. Hoffman. Sorry, you said EPA?
Mr. Tonko. Yes. Any efforts with drinking water, DOE, and
the infrastructure, the electric utility?
Ms. Hoffman. Thank you very much. I understand.
Through the Electric Sector Coordinating Council and
through our responsibility as a sector-specific agency, we have
had coordination discussions with the telecommunication sectors
and some of the other critical infrastructure sectors to think
about how do we really move forward from a restoration process,
from a hardening process, from an advanced technology process,
from a coordination process, and moving forward and
strengthening our economy.
Mr. Tonko. Thank you so much.
Mr. Chair, I yield back. And congratulations.
Mr. Olson. Thank you. The gentleman's time has expired.
The Chair now calls upon the gentleman from Florida, Mr.
Bilirakis, for 5 minutes.
Mr. Bilirakis. Thank you, Mr. Chairman. Thanks for allowing
me to sit on the committee.
And then, also, I want to congratulate you on the Astros'
victory. They are a model. They really accomplished quite a bit
this year, and I like the way they rebuilt their team.
So, anyway, can I have an extra 2 minutes because of that?
Mr. Olson. As long as you want to talk like that, you can
have 10 minutes.
[Laughter.]
Mr. Bilirakis. All right, but I am going to root for
another team next year. You know that.
But, in any case, I wanted to talk about--Ms. Walker, if I
can ask you a couple of questions? I understand that there is a
site prioritization when utilities are being restored and in
the midst of a response resources are often spread thin. If
there are two hospitals--this is a question--if there are two
hospitals in a given area, how do utilities determine which
facility is responded to first?
Ms. Walker. Well, in Texas the hospitals by statute are
required to have backup generation. So, they do have that
requirement. I am not sure how they are decided which one they
respond to first. I know that for CenterPoint Energy during
Hurricane Ike that that was the first areas that the company
went to, was to the hospitals. So that all of the personnel
were trying to restore service to those. So, I am not for sure
and I would have to look into how they would decide between
two.
Mr. Bilirakis. Thank you.
What role do utility companies play in crafting a State's
disaster response plan and determining which sites are
prioritized?
Ms. Walker. They have complete power to come up with their
plan on how to restore power. The Commission does have levels
that we ask them to look at, which are the critical structures
such as hospitals. By statute, they also have to respond to
nursing homes. We clearly have them respond to refineries and
things in the ship channel. So, there is a tier, but the
utilities are responsible for setting their own priorities.
Mr. Bilirakis. Thank you.
How much flexibility does a utility company have in
determining which sites are restored first?
Ms. Walker. They have a lot in Texas. They do work, and
Texas recovery is at the local level, so they do work also with
their counties and their cities to make those determinations.
But the utilities in Texas have a significant amount of
determination on how they restore power.
Mr. Bilirakis. Thank you.
The next question to the panel, what challenges still exist
for Florida and what are your post-storm recommendations? What
DOE resources are available to the communities like mine
impacted by Irma? Who would like to being first?
Ms. Hoffman. I will start. Florida had a very effective
restoration process. They had the arrangements from a mutual
assistance point of view. They looked at, and their investments
in the infrastructure have helped with, hardening their
systems. Their advanced control and metering has advanced their
capabilities. At this stage in the game, Florida really looked
at their codes and standards from a perspective of a Category 3
hurricane. As we are looking at Category 4 hurricanes and
additional hurricanes, I think now it comes down to, what are
some of the additional new capabilities to mitigate a Category
4 and higher-level hurricanes that they are going to have to
consider?
I think from a fuel distribution point of view, that was
the one area of looking at distributing fuel. Gasoline was a
challenge in Florida, but I think it was also partly that the
necessary evacuation that occurred had a run-on on gasoline
stations. And so, it looks at, they did advance by having
generation hookup. So, from an electrical point of view, they
advanced capabilities there. But if I had one area, it is
probably look at the distribution network with respect to
gasoline.
Mr. Bilirakis. The fuel issue, yes, definitely. We were
very fortunate in the Tampa Bay area, I think as you know, to
dodge the Category 3 or 4, but God forbid we have one.
So, anyone else want to comment? I don't have much time. I
know I asked for an additional couple, but I was just kidding.
But does anyone else want to comment on that? Any suggestions?
[No response.]
That is great input. I really appreciate that.
Thank you very much, Mr. Chairman. I yield back.
Mr. Olson. The gentleman is always welcome here. He yields
back.
The Chair now calls upon the man who is working very hard
for a bipartisan agreement to allow me to wear this jersey on
the House floor later today, Gene Green from Houston, Texas, 5
minutes.
[Laughter.]
Mr. Green. I thank my colleague and neighbor for yielding
to me.
For our colleague from Florida, I know there were some
problems with gasoline supplies there, and maybe you can tell
me, does Florida import all your gasoline and diesel? I didn't
know if you had any refineries in Florida. OK. Well, that is OK
because we want to keep selling you the stuff we produce in
Texas and Louisiana.
But, anyway, being a native Houstonian and going through
lots of storms and hurricanes over the years, Harvey was
probably the toughest, even compared to Hurricane Carla who hit
us in 1960, 1961. But every 8 years we have a tropical storm or
a hurricane. In 2008, we had Hurricane Ike, which damaged our
infrastructure because it was a wind storm, the storm surge,
but the wind. By the time Harvey got to Harris County, it was
mostly rain. And our biggest problem was typically so much rain
that it overflowed a lot of our sanitary sewer systems in the
west side of Houston, and even Houston facilities and our
smaller cities and how that did.
But, somewhere along the way when we have these thousand-
year storms that are happening so often, and the average
rainfall in Houston is 49 inches a year and you get 52 inches
in five days, I don't know how we can deal with it. We just
have to dig more reservoirs, spend more money to contain that
water, because water is a precious commodity and we need to do
it, instead of letting it go into the Gulf of Mexico.
This is the first storm that I have had where I have had
fatalities in our district. We lost eight people in our
district. Two of them were breadwinners in their family,
because they thought they could go through this high water in
an underpass.
But the sad one was that we lost a family of six in our
district on Greens Bayou, northeast Houston. The bayou, we have
been working on it for decades to build detention ponds
upstream, but the family turned off into the bayou, literally,
because they thought it was the road. And it was widely
publicized the family was missing, but we didn't find them
until after the water went down down in Greens Bayou, northeast
Harris County.
But, as far as for the utilities, we didn't have that big a
problem. But, as we are sitting here, we will get another
hurricane or a tropical storm. And so, that is what I am
concerned about.
It is important we try to learn from these lessons of these
storms. We are in the middle now of building back houses,
shops, and communities, but we know we have to do better on the
flood infrastructure, both working with the Corps of Engineers
and in Harris County. We have a Harris County Flood Control
District. We tax ourselves to keep from flooding in Harris
County, so we can partner with the Corps. But it is essential
that we fund the Corps of Engineers, FEMA, and other related
agencies in our next supplemental.
I am concerned about Puerto Rico because their electric
grid was in pretty bad shape even before. And some of us were
talking on the Energy Subcommittee a week ago about this may
give us the opportunity for the United States to actually
provide an electric system in Puerto Rico, because I understand
they are still burning fuel oil.
Again, coming from Texas, we can put all the windmills up
and all the solar, which you can't get wind and solar. We would
be glad to have an LNG export/import facility there, because,
one, it would be much cleaner than fuel oil. It would probably
be cheaper, too, because the price of natural gas is relatively
cheap.
I would just like to ask--like I said, I have driven around
Puerto Rico, but I don't live there and I don't represent it,
but I know they need help in getting literally the whole grid
back up. Is that something that we could look at through the
Department of Energy to see if we could redo the grid in Puerto
Rico to where it would be brought up to what we would consider
standards?
Ms. Hoffman. I think it is an opportunity to look at all
technologies and different solutions for investment in Puerto
Rico, and looking at how we can harden the system. But
everything should be on the table of what advancements can be
done with respect to their energy infrastructure. Forty-seven
percent of Puerto Rico electricity comes from petroleum, 34
percent from natural gas, 17 percent from coal, and 2 percent
of renewable energy. And so, there is a lot of opportunities to
think about the generation mix as well as the location of
generation, and the use of the transmission and distribution
system, as well as demand/response and customer engagement.
Mr. Green. Yes. Well, I know in Texas we have had success
with the wind power, not only in west Texas, but south Texas,
and it gives us that type of opportunity to have a different
fuel supply, although it is hard today to heat with low-price
natural gas. That is why some of our coal plants are problems.
Ms. Walker, in your testimony you said that the PUCT's
initial assessment of the Texas utilities is that they did an
outstanding job of responding to the storm. And I know over the
years we have had partnerships with other States and other
communities, that we will send our utility workers up there
when they have a problem. When there are ice storms in Dallas,
we will take care of that. But I don't remember seeing that
much in the Houston or southeast Texas area.
Ms. Walker. Mutual assistance?
Mr. Green. Yes.
Ms. Walker. There probably wasn't that much because the
damage was very different and the cause of the outages was very
different. Usually, the mutual assistance comes in to repair
wind damage, the poles going own, the wires going down. Houston
and Beaumont was flooding. And so, most of that was due to the
substations being out. And so, once we were able to get these
mobile substations in or the waters recede and get those
substations back up and running, we were able to restore the
customers.
The outages in those areas really weren't very long-
lasting. They were more like a thunderstorm. And Houston and
CenterPoint Energy and Entergy were continually restoring
customers. And so, their numbers were very low on an ongoing
basis, although they ultimately restored a lot of people.
Mr. Green. And that is why it worries me, because here in
Puerto Rico I think they are still only about 30 percent of the
power that has been restored. So, it is really a case that we
need to work on.
So, thank you, Mr. Chairman. I yield back.
Mr. Olson. The gentleman's time has expired.
Seeing no members seeking to ask questions, the Chair wants
to thank our five witnesses. Thank you, thank you, thank you
for coming here today.
I remind our witnesses that every member can submit
questions for the record for 10 days. Once you get that, you
have 10 days to respond.
Mr. Rush. Mr. Chairman, I request, I would like to make a
statement.
Mr. Olson. Yes, sir, you have a minute, Bobby.
Mr. Rush. A minute? Thank you, Mr. Chairman.
Mr. Chairman, I must say, with all due respect, as we
conclude this panel and are getting ready and prepare to
introduce the next panel, with all due respect, Mr. Chairman, I
simply smell a rat here. I really smell a rat.
PREPA's lack of response to this subcommittee's efforts to
invite them to attend and provide witness testimony to this
subcommittee is most disgusting and extremely disrespectful.
Mr. Chairman, that said, I strongly request that we use our
subpoena authority to demand that PREPA come to this
subcommittee and disclose to Members of Congress who are
members of the subcommittee what were the facts involved in its
awarding this $300 million contract, which I call the sweetest
of sweetheart deals, to repair and reconstruct Puerto Rico's
electrical infrastructure.
And I also believe, Mr. Chairman, that as has been stated
by Members of both sides during this panel, that FEMA should
also be invited to be at the same witness table. Mr. Chairman,
we ought to get to the bottom of this, and we have got to know
what happened, when did it happen, and who is responsible for
this absurd sweetheart deal that is going to result in numerous
people paying an extraordinary additional amount of millions of
dollars because of the delay in the withdrawal of this
contract.
So, I really request that we use our subpoena authority to
make sure that PREPA stop disrespecting the United States
Congress.
Thank you. I yield back.
Mr. Olson. And, my friend, I share your concerns. It sounds
kind of odd, what happened there, but I will talk to the chair
for the subcommittee, Mr. Upton, and the full committee, Mr.
Walden, about the subpoena issue.
But, right now, a point of personal privilege before the
first panel leaves, and this is maybe at the risk of offending
Ms. Castor. But, Commissioner Walker, I hope you are going to
SMU Saturday, joining my daughter and my wife to watch SMU beat
the tar out of Central Florida.
[Laughter.]
The panel is dismissed.
OK. Second panel, are you all ready? And just like before,
we will start out with opening statements from all of the
panelists, followed by questions from members.
And I recognize Thomas Fanning. Tom is the President and
CEO of Southern Company. He is here on behalf of the
Electricity Subsector Coordinating Council.
Tom, you have 5 minutes for an opening statement.
STATEMENTS OF THOMAS A. FANNING, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, SOUTHERN COMPANY, ON BEHALF OF THE ELECTRICITY
SUBSECTOR COORDINATING COUNCIL; JULIO A. RHYMER, SR., EXECUTIVE
DIRECTOR AND CHIEF EXECUTIVE OFFICER, VIRGIN ISLANDS WATER &
POWER AUTHORITY; CHET THOMPSON, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS; MAX E.
MCBRAYER, JR., CHIEF SUPPLY OFFICER AND CHIEF FINANCIAL
OFFICER, RACETRAC PETROLEUM, INC., ON BEHALF OF THE NATIONAL
ASSOCIATION OF CONVENIENCE STORES AND THE SOCIETY OF
INDEPENDENT GASOLINE MARKETERS OF AMERICA; RAMON-LUIS NIEVES,
ATTORNEY AT LAW, FORMER MEMBER, SENATE OF PUERTO RICO; AND
CATHERINE B. KENNEDY, VICE PRESIDENT, NATIONAL NURSES UNITED
STATEMENT OF THOMAS A. FANNING
Mr. Fanning. Thank you. Thank you for inviting me to
testify today.
My name is Tom Fanning. I am the chairman, president, and
CEO of Southern Company. I am also the immediate past chairman
of the Edison Electric Institute, the association that
represents all U.S. investor-owned electric companies. However,
I am addressing you today in my role as one of three co-chairs
of the Electricity Subsector Coordinating Council. We
collaborate closely with our colleagues from public power
utilities and rural electric cooperatives on the ESCC.
I am pleased to address the subcommittee and to share the
steps the electric power industry is taking to make energy
infrastructure smarter and more resilient, allowing us to
continue delivering affordable and reliable power.
The 2017 hurricane season highlights the critical
importance of cooperation and coordination among electric
utility companies, the Government, and other key infrastructure
industries to ensure fast, efficient recovery for customers.
The electric sector faces constantly-evolving threats to
the energy grid. The industry's risk mitigation strategy
emphasizes a defense-in-depth approach. We focus on
preparation, prevention, response, and recovery, with an
emphasis on the isolation of and enhanced protections for
critical assets.
While this hearing is focused on storm response and
recovery, it is important to note that our companies do not
build the energy grid or our security responses to meet only
one type of threat. We must prepare and plan for them all,
whether manmade or natural, malicious or unintentional,
relating to the cyber or physical security, or a combination of
threats.
Weather is an unavoidable part of our business. In the
aftermath of such events, the industry works to identify gaps,
compile lessons learned, and disseminate best practices. As an
industry, we strive to be better today than we were yesterday
and to be better tomorrow than we are today.
Since Superstorm Sandy 5 years ago this week, the electric
power industry has combined efforts across all segments of the
industry and has worked with the Government partners to
streamline restoration efforts and to improve preparation for
and response to major threats that cause significant outages.
The benefits of this coordination were visible over the
past several months as the industry and Federal Government
worked to prepare for and respond to the hurricanes. There is
an understandable urge to compare storms, but the reality is
that each storm is different. The common threads, however, are
the need for resilient infrastructure, a plan for response and
recovery, and the awesome nature of our industry's ability to
respond to emergencies.
Before I close, I would like to underscore the importance
of the ESCC. During the most recent storms, the ESCC held daily
coordination calls among impacted companies and Government
officials to address critical operational issues such as
identifying specialized equipment needs, removing temporary
flight restrictions for both manned and unmanned aircraft to
assist with aerial damage assessments, coordinating how
industry could re-enter and access disaster areas, and
coordinating response efforts with the oil and natural gas,
telecommunications, transportation, and water and wastewater
sectors.
Energy Secretary Rick Perry was on every call and was
frequently joined by other officials such as Homeland Security
Acting Secretary Elaine Duke. These calls were essential to
identify and address critical issues in the response and
recovery efforts.
The reliability and resiliency of the energy grid are of
paramount importance. Our customers expect the lights to go on
when they flip a switch. When the power goes out, our customers
expect that it will be on soon.
The electric power sector will continue to strive to meet
those expectations through a multilayered strategy, to invest
in smart energy infrastructure, continuous enhancement of our
industry/Government partnership, and the grit of the amazing
men and women who make the energy grid work day-in and day-out.
The subcommittee is showing great leadership with its focus
on preparedness, and we look forward to working with you on
this critical topic.
Thank you again for the opportunity to testify on behalf of
the ESCC, and I look forward to your questions.
[The prepared statement of Mr. Fanning follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Thank you, Mr. Fanning.
And now, the Chair is glad to call upon Mr. Julio Rhymer,
the Executive Director of the Virgin Islands Water & Power
Authority, that suffered devastation from two hurricanes, Irma
and Maria. A 5-minute opening statement, Mr. Rhymer. Thank you.
STATEMENT OF JULIO A. RHYMER, SR.
Mr. Rhymer. Good evening, Mr. Chair, other honorable
members of the Subcommittee on Energy.
My name is Julio A. Rhymer, Sr. I am an Executive Director
and Chief Executive Officer of the Virgin Islands Water & Power
Authority.
On behalf of the Governor of the Virgin Islands, the
honorable Kenneth E. Mapp; the Virgin Island Delegate to
Congress, Honorable Stacy Plaskett; the members of the 32nd
Legislature of the Virgin Islands, and the Governing Board of
WAPA, I thank you for the invitation to provide testimony on
the energy challenges facing the U.S. Virgin Islands as a
result of the passage of Hurricanes Irma and Maria.
As you all are aware, in September of 2017, the Virgin
Islands faced the phenomenon of two back-to-back Category 5
hurricanes within two weeks. According to the Saffir-Simpson
Wind Scale, a Category 5 hurricane has sustained winds of
greater than 157 miles per hour. There were cases in Hurricane
Irma that winds were sustained at above 190 miles an hour.
WAPA's transmission and distribution facilities were, plain
and simple, destroyed by the catastrophic winds of two
hurricanes. Due to Hurricane Irma's impact on September 6th,
2017, the St. Thomas, St. John, Water Island, and Hassel Island
electrical transmission distribution system suffered
significant damage. The St. Thomas system sustained damages of
approximately 80 percent; St. John, approximately 90 percent;
Water Island, 90 percent, and Hassel Island, 90 percent.
Approximately two weeks later, on Tuesday, September 19th,
2017, Hurricane Maria caused damage to almost 60 percent of the
transmission and distribution system on St. Croix. The islands
of St. Thomas, St. John, Water Island, and Hassel Island did
not receive any significant damage from a result of Hurricane
Maria.
To date, the Authority has approximately 536 linemen and
other related off-island personnel in the Territory, restoring
WAPA's electrical infrastructure. With the assistance of FEMA,
naval vessels and cruise ships have been brought in to provide
sleeping quarters for the off-island crews, since many hotels
and guesthouses throughout the Territory remain closed after
sustaining major damages during these two hurricanes.
By far, the biggest challenge that I would like to focus on
today is funding the day-to-day operations and hardening of the
system in the event of future storms. Without question, these
hurricanes have decimated WAPA's finances. While we appreciate
the assistance that has been, and will be, forthcoming to
rebuild the systems that were damaged, one of our primary
concerns as the Authority is the ability to meet prestorm
expenses. Prior to hurricanes, the Authority's revenues were
approximately $25.6 million per month. Since the hurricanes
events, and since we are unable to provide electrical service
and bill customers, revenues have dropped below $2 million per
month.
WAPA has reoccurring expenses such as payroll, insurance,
plant operation and maintenance, debt service, and previously-
executed contracts, and financing agreements it must pay. To
address this dramatic shortfall, the Authority has sought,
through the government of the Virgin Islands, a community
disaster loan. Any support or assistance that you can offer in
this regard is appreciated.
One of the evident takeaways from the two Category 5
hurricanes, and significant damages to this regional system
Territorywide, is that there is an urgent need for WAPA to
rebuild its transmission and distribution systems, but to
harden it to a point where it is resilient to wind storms. WAPA
believes it would significantly reduce its post-storm hurricane
period by undergoing more of its critical infrastructure and by
moving away from wooden poles and introducing composite poles
on the major distribution circuits.
WAPA must also address its grid, since it is too
susceptible to damage from wind storms. WAPA had a proposed
plan to construct a series of microgrids on each island. Each
microgrid would be a localized group of electrical facilities
that would either work in tandem with the generating facilities
or an option for disconnection where they can stand alone. In
the event the power and the main grid is interrupted for any
reason, the microgrid would function as a small facility
generating its own power at this point.
Currently, you have in the works a microgrid on the island
of St. Croix that is actually going to go out for bid, and that
will provide, basically, power through solar and battery
storage to our airport facilities, a waste treatment facility,
a correctional facility, and, basically, a police station at
this point. What we are actually attempting to do here, as a
utility moving forward, is to harden our system, No. 1, and,
basically, make it more resilient by having microgrids.
I would like to thank you for the opportunity to appear
before the Subcommittee on Energy. I am available to answer any
question that you may have on this matter.
[The prepared statement of Mr. Rhymer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Thank you, Mr. Rhymer. And I heard what Irma
didn't destroy, Maria drowned.
Mr. Rhymer. Yes, it did.
Mr. Olson. The Chair now calls upon Mr. Chet Thompson. Chet
is the President and CEO of the American Fuels & Petrochemical
Manufacturers.
Mr. Thompson, you have 5 minutes for an opening statement.
STATEMENT OF CHET THOMPSON
Mr. Thompson. Thank you, Mr. Vice Chairman, Ranking Member
Rush, and members of the subcommittee. Thank you for having me
here today.
My name is Chet Thompson. I am the President and CEO of the
American Fuel & Petrochemical Manufacturers. AFPM represents
the refining and petrochemical industries. Our members
represent 120 refineries, 140 petrochemical facilities. That
represents 98 percent of U.S. production capacity. More than
half of that capacity is located along the Gulf Coast.
Hurricane Harvey impacted our facilities in the fuel supply
chain very hard. Hurricane Irma impacted the fuel supply chain,
but largely in Florida, while Nate's impact on our assets was
rather minimal.
But, more importantly, the combination of Hurricanes
Harvey, Irma, and Maria were devastating to the people of the
Gulf Coast, particularly those in Houston and the Beaumont
area, Florida, and Puerto Rico. Many of those impacted are part
of our extended oil and gas family. Our hearts and prayers
continue to go out to those still struggling to recovery, and
we stand by them and will help them any way we can.
As a result of this personal impact on us, the subject of
today's hearing is particularly important to our industry. So,
I would like to limit my time this afternoon only to three key
points of my written testimony.
First, by and large, the U.S. refining and petrochemical
industries weathered the storm fairly well and proved to be
very resilient. This did not happen by accident. Rather, it was
the result of lots of hard work and preparation, and with the
help of an incredibly dedicated workforce and Federal, State,
and local first responders. They are the true heroes coming out
of these events.
If you wanted to draw the storm up that could wreak the
most havoc on our industry, Harvey was it. Harvey hit Corpus
Christi as a Category 4 storm, moved right up the east coast,
stalled largely over Houston, which is the epicenter of the
refining and petrochemical industries. It dumped over 60 inches
of rain in some locations and more than a trillion gallons of
water across Texas and Louisiana.
At its peak, Harvey knocked 24 of our refineries offline.
That represents 25 percent of all U.S. refining capacity. It
had a similar impact on our petrochemical members. It knocked
60 percent of U.S. petrochemical capacity down. That is 80
percent of the capacity found in the Gulf Region.
Harvey also had a significant impact on the entire fuel
supply chain. It shut down ports, pipelines, terminals, rail,
and certainly gasoline stations. Our facilities couldn't get
feed into their plants, and we certainly couldn't get products
out.
This had the potential to be catastrophic for the fuels and
petrochemical supply chains, but in the end it wasn't. Just two
weeks after Harvey made landfall, 20 of the 24 facilities that
went down had restarted. And the petrochemical facilities made
substantial progress during this period as well.
Again, this was not by accident. Facilities were prepared
for the storms. They had applied many of the lessons learned in
the aftermaths of previous storms like Katrina and Rita. For
example, our facilities developed more sophisticated
preparedness plans, improved storm monitoring, hardened
critical infrastructure, elevated pumps and generators,
procured spare parts so we could be ready to move with recovery
efforts after the storm. We upgraded our IT systems to help us
locate employees and ensure that they had the assistance they
needed. All of this made a difference. We came back online much
faster than we did after prior storms.
The second point I would like to make, the Federal and
State response was significantly improved compared to previous
storms. One of the lessons we have learned is that we have to
better coordinate Federal, State, and local governments. So,
over the last few years, we have been working hard in that
regard, working closely with DOE and DHS to improve our
relationships.
The results during Harvey, in particular, were excellent.
We were in constant contact before, during, and after the
storms. The improved coordination was most evident in the quick
review and approval of fuel waivers, unlike in prior storms,
helping us get fuel to where it was needed quickly and
efficiently. Our Federal and State partners, particularly
Secretary Perry, Administrator Pruitt, Governors Abbott and
Scott, deserve kudos for these improvements.
If I had to identify the one area that could be improved,
it would be better communication by our Government to consumers
about the fuel supply chain and the challenges that often
accompany events like hurricanes. For example, the Government
could help us explain the timelines for bringing facilities
back online and getting products back to the distributors and
the marketers. And it could also help us discourage panic
buying that always seems to accompany these types of events.
Third and finally, as always, our companies will work with
Federal and State authorities to identify and apply lessons
learned. Although we did fare fairly well, no doubt there are
going to be things we can learn and improve upon to make future
responses even better. We would caution anyone to resort to any
knee-jerk reactions or conclusions, particularly those based on
a few isolated events, before full assessments are in.
So, I know I am running out of time. I thank everyone for
my time and the opportunity to speak today.
And again, I would like to express our thanks and
appreciation for our incredible workforce and our first
responders. They certainly deserve our appreciation.
So, thank you, and I am happy to answer any questions.
[The prepared statement of Mr. Thompson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Thank you, Mr. Thompson.
The Chair now calls upon Mr. Max McBrayer. Max is the Chief
Supply Officer for RaceTrac Petroleum, Incorporated.
You have 5 minutes, sir.
STATEMENT OF MAX E. MCBRAYER, JR.
Mr. McBrayer. Thank you. Mr. Vice Chairman, Mr. Ranking
Member, and members of the subcommittee, thank you for the
opportunity to testify today on the retail community's response
efforts to 2017 hurricane season.
My name is Max McBrayer. I am the Chief Supply Officer and
the Chief Financial Officer of RaceTrac Petroleum, Inc. I am
testifying today on behalf of the National Association of
Convenience Stores and the Society of Independent Gasoline
Marketers of America. RaceTrac is a family-owned business,
headquartered in Atlanta, Georgia, operating more than 450
convenience stores across 12 States and employing nearly 9,000
team members.
The 2017 hurricane season had a devastating effect on
America's fuels infrastructure and markets. During Hurricane
Harvey, flooding damaged more than a quarter of the U.S.
refining capacity and shut down fuel pipelines. This put severe
strain on the domestic fuel supply. Hurricane Irma led to an
increased demand for fuel in Florida, further straining the
fuels market and causing prices to rise sharply.
Natural disasters directly and severely affect the retail
fuels market. Margin on fuel sales range between 2 and 20
cents, and retailers must constantly react to changes in supply
and demand to ensure their prices remain competitive.
During any severe weather event, wholesale fuel prices
become more volatile as the market tries to assess and
anticipate supply availability. When these unwelcome changes
occur, retailers respond to meet their cost.
Due to the infrastructure damage, compliant fuel
inventories became strained, leading to escalating wholesale
prices. Retail market prices generally reflect rapid increase
in the wholesale prices. In this instance, fuel retailers made
individual decisions on whether to increase prices and risk
losing customers or potentially take losses by keeping prices
low and not covering the increased wholesale cost.
Despite the tough situations, the fuel market was supported
by the actions of both the Federal Government and the State
governments. The governments worked with us to deal with the
issues before, during, and after the hurricanes.
Communication and coordination initiatives were
particularly important. For example, the Governors of Texas and
Florida held conference calls with industry and Government
stakeholders where they listened to concerns and rendered
prompt assistance.
In Florida specifically, the Governor's office waived
certain restrictions for highways, helped ensure that ports
prioritized fuel shipments, coordinated escorts for fuel trucks
and ships, easing the movement of product to the retail fuel
locations.
At the Federal level, disaster response efforts spanned a
number of agencies, which ultimately issued more than 30
waivers to help deal with fuel supply issues. Of particular
importance to RaceTrac was the waiving of hours-of-service
limitations for drivers providing assistance to affected areas.
These waivers were the difference between getting fuel to our
customers in a reasonably affordable and timely manner and not
being able to supply customers with the fuel they needed.
In response to State petitions, Federal agencies also eased
restrictions on the type of product that retailers could sell.
For example, EPA temporarily waived certain reformulated
gasoline requirements under the Clean Air Act.
Despite the major disruptions to the fuel distribution
system after the hurricanes, the impact on consumers and the
economy was still less than what occurred with Hurricanes
Katrina and Rita in 2005. This is because the Government worked
with the private sector to respond appropriately.
There are still important lessons to be learned, however.
For instance, there is no good coordinated effort to make sure
that consumers were informed of the status of fuel supplies via
social media. As the hurricanes approached, we believe that
much of the panic about fuel availability caused a significant
and totally unnecessary pull on the available fuel supply. The
panic lessened when information on the fuel supply was shared
with the public. In addition, bottlenecking at ports and fuel
terminals was a problem that the Government could have done
more to alleviate.
Finally, in the hurricanes' aftermath, truck drivers and
other employees found it difficult to get to affected areas
quickly. Anything that can be done to remove hurdles for fuel
transportation would speed up recovery efforts in the wake of
future hurricanes.
RaceTrac believes the collaboration between the public and
the private sectors was critical to the successful response
efforts. We are proud to have been able to serve the
communities that we operate in.
And I thank you for the opportunity to provide this
testimony.
[The prepared statement of Mr. McBrayer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Thank you, Mr. McBrayer.
The Chair now calls upon the honorable Ramon Luis Nieves,
who is now an attorney at law, was a former distinguished
member of the Senate of Puerto Rico.
You have 5 minutes for an opening statement, sir.
STATEMENT OF RAMON-LUIS NIEVES
Mr. Nieves. Thank you, Chairman Olson, Ranking Member Bobby
Rush, members of the subcommittee.
My name is Ramon-Luis Nieves. I had the privilege to serve
the people of Puerto Rico as senator of San Juan and chairman
of the Committee on Energy. I currently practice law in the
State and Federal courts of Puerto Rico.
I want to thank the subcommittee for this opportunity to
discuss Puerto Rico's energy challenges. As a resident of San
Juan, I have personally suffered the problems associated with
the lack of electricity for more than 40 days. The currently
energy crisis is destroying our economy and our way of life.
Nobody denies the challenges of repairing the collapsed
energy grid of Puerto Rico, but I submit to you that most of
the challenges to turn the lights back on in Puerto Rico are
neither natural nor geographic. They are manmade.
The Puerto Rico Electric Power Authority, PREPA, was
already a bankrupt, fragile, and useless entity before
Hurricane Maria made landfall. The Power Authority's grid was
obsolete, lacking adequate maintenance.
The recent Whitefish debacle is exhibit A of the governance
issues plaguing PREPA. As we evaluate energy options for Puerto
Rico, we must be particularly alert about disaster contractors
who may try to take advantage and profit off of our people's
misery.
But I didn't take two flights from San Juan to complain
about PREPA. I come before you with proposals to help us
transform Puerto Rico's energy model.
Energy equals life. As most Puerto Ricans sadly understood
after Hurricane Maria, the lack of a strong, resilient, and
smart energy system has the potential of killing people and
destroying the economy. The actual death toll not of Hurricane
Maria, but of Hurricane PREPA has not been properly disclosed
by the government of Puerto Rico.
While working hard to turn the lights back on as soon as
possible, policymakers must also think long term. A plan to
transform Puerto Rico's energy model, supported by significant
Federal support funding, is the right course of action.
Technology and innovation are transforming the energy
industry. Puerto Rico must break free from PREPA's centralized
energy model. The people of Puerto Rico deserve an energy model
whereby more and more customers are able to opt for distributed
generation or go off the grid in their homes and business.
Policymakers are agreeing with the idea of a new energy
model based on several regional microgrids. Microgrids for key
Government security and health installations, such as
hospitals, will also help recovery efforts after future storms
and hurricanes.
The mandate to regulate microgrids is already in our law
books. Act No. 133 from last year the last bill that I
sponsored in the Senate, to include microgrids as a mandate.
However, a Federal mandate to include microgrids in a new
energy model for Puerto Rico will certainly help.
PREPA has also pointed out that the Stafford Act restricts
to rebuild the grid as it was. Perhaps you may be able to
change that by amending Federal law.
PREPA's old, and now collapsed, grid is not able to deal
with the technical challenges of an energy model that embraces
renewable power. However, as I have said, countless
policymakers agree that just repairing the old, obsolete energy
grid of Puerto Rico will be a colossal waste of taxpayer
dollars. PREPA is broke. So, the Federal Government is the only
entity able to finance this key project.
Let's talk about PREPA's governance. The Whitefish scandal
is a sad example of the shameful and incompetent governance
that characterizes PREPA. PREPA awarded a no-bid $300 million
contract to an unknown company with just two employees. The
Government recently requested PREPA to cancel the contractual
agreement, but 40 days after Hurricane Maria, and hundreds of
deaths later, PREPA did what it should have done from the
start, request the mutual aid offered by private and public
electric companies. But where was PREPA's governing board?
Nobody really knows, but I submit to you that this Whitefish
business is very harmful to Puerto Rico's credibility.
Very quickly, since my time is almost up, PREPA collapsed
under its $9 million debt. Congress, the administration, and
the oversight board must create a financial solution for
PREPA's debt. Aggressive restructuring of the debt, combined
with new Brady-type bonds and continued oversight over PREPA,
could be a way to solve this monumental problem.
And just to finish up, the most efficient way to transform
the energy model of Puerto Rico is by giving the proper
resources to Puerto Rico's independent energy commission. An
independent and strong regulator is key for our recovery. In
order to guarantee the Federal funds to build a new energy grid
are properly used and allocated, I propose that the
Revitalization Coordinator of Puerto Rico under PROMESA and the
Puerto Rico Energy Commission be given sole authority over
PREPA. PREPA shall cease to exist in its present form.
Just to wrap up, thank you for the opportunity. The people
of Puerto Rico urgently need to turn their lights back on, but
we also demand the resources to create a new energy model for
our island. Our lives depend on it.
Thank you.
[The prepared statement of Mr. Nieves follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Thank you, Senator Luis Nieves.
We saved the best for last, ma'am. Our final opening
statement is going to be from Ms. Cathy Kennedy, and she is the
Vice President of the National Nurses United.
Ma'am, you have 5 minutes for an opening statement.
Welcome.
STATEMENT OF CATHERINE B. KENNEDY
Ms. Catherine Kennedy. Vice Chairman Olson, Ranking Member
Rush, and members of the subcommittee, good afternoon, and
thank you for inviting National Nurses to take part in this
hearing.
My name is Catherine Kennedy of Carmichael, California, and
I have been a registered nurse for 37 years. I currently serve
as the Vice President of National Nurses United, which is the
largest union of RNs in the country. I submit the testimony
today on NNU's behalf.
From October the 4th through the 18th, I served on a
voluntary deployment to Puerto Rico with NNU's Registered Nurse
Response Network to assist with Hurricane Maria's disaster
relief. Fifty nurses deployed with R&R into Puerto Rico among
300 skilled union members organized by AFL-CIO.
NNU nurses very much appreciate your holding this hearing
and providing us the opportunity to share our account of the
public health crisis that we witnessed. NNU's full report on
the conditions of Puerto Rico is attached to my written
testimony.
The lack of electricity is endangering people's lives and
leading to preventable death and illness. I was the lead RN for
the healthcare teams on the deployment. I helped to organize
nurses into teams and, with a map of the island, we tracked the
public health assessment of each community that we visited,
evaluating whether people had access to food, water, and
healthcare, their basic living conditions, and medical needs.
Time and time again, we saw that lack of power exacerbated the
disaster or created new ones.
Basic medical services were down in many areas and not
fully functioning in others. An acute public health crisis has
developed. Without electricity, people with chronic illnesses,
such as diabetes and hypertension, cannot refrigerate their
medications. For example, in Loiza, nurses worked with elderly
residents who had to put their insulin in bowls of tepid water,
trying to keep this lifesaving medication cool enough to use.
Pharmacies could not refrigerate their medications, either.
They also cannot access computer systems which store
prescription orders. Therefore, patients were scrambling to
find doctors to write new prescriptions, so they can give them
to the pharmacies. But many doctors' offices were closed,
partly because the grid is still down and accessing reliable
generators and fuel for them was nearly impossible.
Pharmacies also cannot access insurance information. So,
patients are being asked to pay full price for medications.
Most people don't have cash, and if they had money in the bank,
they can't access it because the ATMs and the banking process
systems are also down.
As long as the power grid is down, hospitals cannot
function at full capacity. Generators are prone to failure, and
fuel is hard to access. With generators, hospitals can't
perform certain procedures or tests which use a large amount of
energy. And at one hospital we know that they could not perform
MRIs as long as they relied only on generators.
Without reliable power, the problems of accessing food and
water are amplified. The simple act of purchasing food and
water, when it is available, is nearly impossible. Stores can't
take credit cards, and ATMs don't work. Bank services that
normally take minutes now take hours.
The people of Puerto Rico are unable to refrigerate and
cook their food. They must rely on canned and processed foods,
which are high in sodium. Access to food in rural communities
is especially difficult. As long as there is no power, people
will be reliant on relief organizations to provide food and
water for them.
Electricity is also needed to run wastewater treatment
plants and to restore the functioning of water utilities.
Without clean running water, nurses have witnessed the
beginnings of multiple outbreaks of waterborne diseases,
including leptospirosis, an animal-borne bacterial disease that
can be fatal if not treated in time.
Then, there are problems accessing FEMA aid. People can't
access FEMA's online notices and aid application. For those
that are able to apply for aid, they are told that necessary
followup communication will be sent either by text or email.
People don't have power right now. They are not going to
receive any followup for their FEMA applications.
NNU urges Congress to use its oversight and appropriation
authority to ensure that FEMA and other U.S. agencies respond
to this crisis effectively. It is unacceptable that citizens of
the richest country on earth have been denied necessary
humanitarian aid and left to die. With a growing climate
crisis, relief to Puerto Rico must come in the form of
responsible measures that can build a sustainable energy
future.
Thank you again for giving NNU the time to share the
stories of the people and places in Puerto Rico that we cannot
and must not forget. Thank you.
[The prepared statement of Ms. Kennedy follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Olson. Thank you, Mrs. Kennedy.
And now is the fun time, questions from the Members. And
the Chair will yield to himself for 5 minutes of questions.
My first questions are for you, Mr. Thompson. First of all,
I have to say congratulations. I mean, I was there for
Hurricane Ike, Tropical Storm Allison. I was there for
Hurricane Harvey. Most of our capacity was in that storm. You
guys came roaring back. So, congratulations for getting that
turned around so quickly.
I have talked to a lot of people. You guys have gotten much
better preparing for hurricanes or sort of natural disaster.
Yes, we are going to take a hit; we know it. I have heard like
with Katrina, Rita, and Ike, you all learned how to not fully
shut down our refinery, but keep it warm, so to speak, not the
complete shutdown, but keep it going where it is that risk of
some sort of breach. But, once the storm clears, get that thing
up like that.
So, I just want you to talk about how you prepare a
refinery that is directly in the path of a storm like Harvey to
make sure to get that thing back online as quickly as possible.
Mr. Thompson. Well, thank you for the question, and I
address some of this in my opening remarks. Most of this, of
our ability to weather the storms, one was our credible
workforce. We literally had thousands of people that were
riding out these facilities. When their own families and houses
were in peril, they were helping keeping our facilities
literally above water and ready to go.
Also, lots of preparation. We have been working on storm
for years, working with the National Petroleum Council, working
with DOE and DHS. This was not something that we prepared for
just a few weeks ago.
We took all the lessons learned from prior storms and we
put them in the action. We hardened our infrastructure. We
elevated what we could elevate. We have much better storm-
tracking capabilities now. So, we could identify exactly where
the storm was going and identify when we had to bring the
systems down.
Safety is the No. 1 responsibility. So, our facilities will
come down when safety demands it. And so, for those facilities
where they realized that they weren't going to be hit as hard,
they could remain warm and ready to go. Some of the facilities,
indeed, had to come all the way down.
So, I would just end by saying a lot of hard work, a lot of
dedication. And again, we can't applaud our employees enough.
Mr. Olson. And lessons learned, which I know it just goes
with the territory. You will have some leaks, some chemical
leaks, you know, whatever. For example, we have these big tanks
that have floating tops. And the water got so high, almost 5
feet of rain overcame the capability, and you had some small
leaks.
So, my question is, what are you all doing to prevent and
respond to these spills before they happen? Because I know it
is amazing what happened. I mean, it was such a stellar
performance. But how do you make it even better going forward?
Mr. Thompson. Well, I can assure that every company, those
impacted and those that even weren't directly impacted are
assessing how we responded to the storm, what went well, what
didn't go well. We, as a trade association, bring our members
together. We share information. And we will work to improve.
Very storm, we learn from the prior one to get better.
Mr. Olson. Thank you.
A question for you, Mr. McBrayer. I mean, I was driving
around pretty much for a week after Harvey hit and you could
find gasoline. Some shops were shut down. My question is, was
that because of power, because of lack of supply, lack of the
gasoline, or lack of the employees being able to get to work
because of all the floods? So, what was going on there?
Because, again, you could find it, but some stations weren't up
and running and, as you mentioned, there was some price gouging
because of all sorts of rushes because people are panicking
that there will be no gasoline.
Mr. McBrayer. All of the things that you mentioned, Mr.
Vice Chairman, are correct. Some of it is due to the fact that
we rely upon the employees who are living in the affected area.
And like any good employer, we are more concerned about their
life at home and being sure that they are prepared to meet the
needs of their family before they return to work.
We do have some problems with the electrical supply.
Getting generators into our stores, specifically, was quite
challenging in the Houston area because of the amount of
flooding in the roadways. There are some stores that just
choose not to buy at the costs that tend to go up during these
disasters.
But most everyone is working hard because in our business
we build 50-year assets. We are there for a long time. And so,
our long-term mentality is to provide what our guests, our
consumers, need, and to work hard to do that.
It is a site-by-site issue as to what the problems are and
what we may need to do. We have stores in the south Houston
area with some water in tanks. We have had stores that were
completely flooded out that are still yet to reopen. But you
have to assess your assets one at a time and do things you can
quickly in order to bring them back online.
Mr. Olson. One further question, Mr. Fanning. You brought
up UAVs, and that is a big deal, hard back home. A town called
Missouri City had some levies, not so much oil production, but
levies that may be breaching. They were fine, the UAVs, they
could see it and, then, they were grounded. So, how about the
role of UAVs in these disasters for oil and all the operations
with the petrochemical industry? Because those things are
working and, for some reason, they were shut down because there
was some kind of danger. And that was just not right to do
because of that breach; they may have prevented a breach
because they saw it with the UAVs. So, any idea about oil and
gas operations, refining, storage, whatever, that UAVs could
help out?
Mr. Fanning. Yes. Well, we don't impact oil and gas
particularly. But, in response to any storm, there should be a
comprehensive plan that is undertaken, really driven by the
local authorities.
I was listening to your prior panel. Very interesting, in
that every utility works with--for example, in Georgia, they
would work not only with the Federal agency FEMA, but with
GEMA. Within that context, all critical infrastructure is
evaluated with respect to the approaching threat. And
therefore, we develop a set of priorities and, essentially, a
response regime as to how to provide the best benefit going
forward.
I can't speak to Missouri or whatever the impact is there,
but I would assume that they have taken those things into
account.
Mr. Olson. Thank you. I am aware of my time.
The Chair now recognizes the gentleman from Illinois, the
ranking member, Mr. Rush, for 5 minutes.
Mr. Rush. I want to thank you, Mr. Chairman.
Ms. Kennedy, your testimony has been very, very amazing
testimony. I am amazed at the breadth of the tragedies that are
occurring, even as we speak, in Puerto Rico. And I amazed at
the lack of proper attention by those in our Government in
determining their response to this American tragedy in Puerto
Rico.
There are some who are disputing the official death toll.
Some say that, oh, 51 casualties due to the hurricane. But,
yet, the Puerto Rican Department of Public Safety confirmed
that over 900 bodies have been authorized for cremation since
Hurricane Maria tore through their island on September the
20th. And that 900 figure includes deaths related to lack of
oxygen and other fatalities that appear to be due to the power
outage. Yet, some say that those fatalities should just be
considered natural deaths.
Do you concur with this definition from your experiences?
You have spent time there. Do you believe that the death toll
from Hurricane Maria is actually 51 or is it closer to 900, or
is it somewhere in between?
Ms. Catherine Kennedy. Well, thank you for the question.
We were there from October the 4th through the 18th. And as
I said in my testimony, what the nurses saw was that, when you
get outside of San Juan, that they were pretty much cut off
from electricity, from communication, from anything. So, when
you ask me what was the death toll, do I believe whether it is
51 versus 911, or somewhere in between, personally, I think it
is more of the higher.
What we saw was people were desperate. We were considered
almost the first ones that they even saw as it relates to food
or water, or any kind of communication. And through word of
mouth, they did say that the neighbor passed, whether it was
through leptospirosis or natural causes--you mentioned the lack
of electricity and without oxygen. So, yes, I think it is
rather on the high side.
Mr. Rush. Mr. Nieves, do you have any further insight into
the actual number of fatalities and the reason for those
fatalities?
Mr. Nieves. Yes. Basically, I really agree with Ms.
Kennedy. The official death toll of 59 up until now is very
superficial and misleading. By personal experience, I have
talked with dozens of family, friends, that have told me, ``Oh,
my grandmother died. She passed because she didn't have
electricity in her nursing home.'' A lot of elderly people that
do not have electricity are simply dying.
And so, how can you relate that to Hurricane Maria? It is
very difficult because it didn't happen that day. But the death
toll is, in my view, in the hundreds.
Mr. Rush. So, even today, as we sit here in this committee
room, there are people who are still dying in Puerto Rico
simply because they have no electricity, even today?
Mr. Nieves. Yes. As I said in my testimony, people are
dying today not because of Hurricane Maria, but because of
Hurricane PREPA, because they don't have electricity in their
homes and care centers.
Ms. Catherine Kennedy. I would agree. Without electricity,
without power, you know, there are stories where patients
actually go to San Juan when the electricity is up, and they
take their nebulizers and plug them in, so that they can do the
breathing treatments. Or they may sit in clinics where they
have access to oxygen and use the oxygen there throughout the
day, and then, they go home where there is no electricity and
they are without oxygen, without anything.
Mr. Rush. Thank you, Mr. Chairman. I yield back.
Mr. Olson. The gentleman yields back.
The Chair now calls upon the gentleman from Illinois, Mr.
Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman.
It is great to have you here. I want to direct some of my
questions to Mr. Fanning.
Mr. Fanning, if the electricity went out in Atlanta,
Georgia, who would get called?
Mr. Fanning. Initially, Paul Bowers, President of Georgia
Power Company, but that is a pretty clear deal.
You know what is interesting in these storms, we have,
essentially, people that run the storm activity. They are fully
empowered to work with whatever State, local, Federal
government, to get the lights on as fast as we can. They have a
clear sense of priority and they get the job done.
Mr. Shimkus. Again, Puerto Rico is an island. It is very
difficult, and I kind of wish the administration would have
deployed the 82nd Airborne and just had a parachute jump into a
lot of communities that don't have access. At least there would
be a meal ration. And the military has even solar packs that
they take in Afghanistan. If there was one thing I wish they
would have done more than anything, it is really deployed.
But you also heard in the first panel that the fact that
there was no request for help until five weeks later. That is
not normal. I mean, you represent the Electricity Subsector
Coordinating Council.
Mr. Fanning. That is right.
Mr. Shimkus. Isn't that something that you all do as part
of that?
Mr. Fanning. Absolutely. In fact, I would argue, especially
this year--the Electricity Subsector Coordinating Council was
originally formed to focus on cyber and physical security. We
have added to that, given the success we have demonstrated on
those issues, this notion of storm response.
Following Sandy, the electric utility industry reorganized
what we call regional mutual assistance groups. And so now,
under the kind of structure of the ESCC, we bring together,
really for the first time, an enhanced collaboration, not only
of investor-owned utility responses, but also collaboration/
coordination with municipal utilities, cooperative utilities.
We offer that up and we participate in a series of
restoration activities, Federal Government, local, and with
each other. And we do that, also, interdependent with the other
kind of industries that you all were talking about in the last
segment. And that is telecom, so important; water and sewer;
health care.
Believe it or not, we go beyond the notion of offering
assistance just for the restoration of electrons. In Houston,
particularly, my company got called on for two things that had
nothing to do with electricity.
One was for the humanitarian rescue effort. Within 20
minutes of a phone call, we sent forward pilots and drones to
help identify where survivors and other people may be.
Secondly, through Alabama Power, we delivered machinery
that was able to operate in very high water conditions that
were used to help rescue people.
Mr. Shimkus. Thank you.
And PREPA, or the Puerto Rican Electric Power Authority,
they are not involved in this group, are they?
Mr. Fanning. So, PREPA works under the aegis of the
American Public Power Association, which is, essentially, a
municipal organization. We offered help, but PREPA, the State
of Puerto Rico, for whatever reason, elected to pursue a
different path, not pursue the mutual assistance rubric and
really go through bilateral----
Mr. Shimkus. Yes, and let me go to the elected
representative, Mr. Nieves. When we look back now on lessons
learned and how we want to move forward, would you agree that
we probably should look at ways in which the whole community
can be helpful and develop these memorandums of understanding
where we can get joint use and quick response? That would be
probably a pretty good lesson learned in this?
Mr. Nieves. Well, the thing is, the fact is that the
American Public Power Association, and I understand that at
least the Electric Institute offered since day one mutual
assistance to PREPA, but PREPA pursued another way. So, it is
not a lack of an agreement, but it was a lack of will from
PREPA's part. And then, we have the Whitefish situation.
Mr. Shimkus. Yes, yes. And I am sure we are going to have
time to continue to look at that. But, believing your
testimony, which I do, that is, I would call that criminal
negligence. And I am sorry for that.
My time has expired, Mr. Chairman. I yield back.
Mr. Olson. The gentleman yields back.
The Chair now calls upon the gentlewoman from Florida 14,
Ms. Castor, for 5 minutes.
Ms. Castor. Thank you, Mr. Chairman.
Thank you all very much for being here.
The more we hear directly from folks like you that are in
the U.S. Virgin Islands and Puerto Rica, the more disturbing it
gets. I think you can sense the outrage building from this
committee over the Puerto Rico Electric Power Authority.
Mr. Nieves, are you surprised that PREPA did not respond to
this committee and, in essence, refused to appear here?
Mr. Nieves. I am sad to say that I am not surprised. When I
used to Chair the Senate's Energy Committee, one of the things
that we found is their total lack of transparency. So, to me, I
assume this is a lack of respect for this committee that PREPA
is not here on this group.
Ms. Castor. And were you surprised to hear Mr. Alexander,
who is the lead for the U.S. Army Corps of Engineers in
repairing the grid in Puerto Rico, were you surprised to learn
that he hasn't even been able to have a conversation with
PREPA.
Mr. Nieves. Sadly, I am not surprised.
Ms. Castor. So, how do we justify taxpayer dollars now
going to repair a grid in Puerto Rico, trying to work with
PREPA after they refused to interact with the committee? They
are not working with the Army Corps of Engineers. They are
wasting taxpayer money through this Whitefish contract that has
outraged so many people. And yet, the need is so great on the
island. How do you recommend that we move forward? We are going
to have to address the PREPA situation in law as soon as
possible, I would assume.
Mr. Nieves. Yes. First of all, we have to really understand
and consider at the end of the day, given PREPA's governance
problems, we need to think that people are dying. Our economy
is dying. So, how do we work around that, or PREPA's lack of
governance and transparency?
My suggestion, and that I did in my testimony, is that
since Congress already passed the PROMESA act, and the
oversight board named a Revitalization Coordinator that has
been appointed to take over PREPA, that Congress finds a way, a
mandate, a specific mandate, that Federal taxpayer money to
create a new energy grid be under the supervision of the
Revitalization Coordinator of the board and the Puerto Rico
Energy Commission, which is an independent, non-political,
nonpartisan, and highly technical body. So, you can bypass
PREPA and the government of Puerto Rico. So, that could be a
way to get around it.
Ms. Castor. And this has to be, we have to have a sense of
urgency to do this, because they are talking about the next
emergency bill maybe will be in December, hopefully. I mean,
there is a lot of things on the agenda for Congress in
December. But time is of the essence here.
Mr. Nieves. Yes.
Ms. Castor. And, Colleagues, we simply have to find a way
to at least begin to plan to build in some resiliency, get the
power on, but begin to lay the groundwork for a modern electric
grid, and address the ineptitude of the Puerto Rico Electric
Power Authority. Lives hang in the balance.
We have the experts at our fingertips. We have the
technology to do this. Does Congress have the capacity to act
with a sense of urgency, knowing how our fellow citizens are
suffering there? So, that is a challenge for us.
So, I thank you all very much for being here.
And I yield back my time.
Mr. Olson. The gentlelady yields back.
The Chair now calls upon the gentleman from Mississippi,
Gregg Harper, for 5 minutes.
Mr. Harper. Thank you, Mr. Chairman. Congratulations to the
Astros.
Mr. Olson. Thank you.
Mr. Harper. And I know it was a great series.
I want to thank each of you for being here. This is still
something that just is stunning, the hurricanes we have had to
deal with this season. And certainly what has happened in
Puerto Rico has concerned us all.
So, Mr. Fanning, I know you mentioned that it is more than
just power or restoration of power. It is also telecom, water
and sewer issues. Can you talk for a moment and tell us how
utilities use their communications network to recovery and
respond from hurricanes and other weather-related events, and
how reliable do those communications networks need to be?
Mr. Fanning. Yes. Thank you, Congressman, and thank you for
your service to the great State of Mississippi.
Mr. Harper. Thank you.
Mr. Fanning. The best example of that is Katrina, as you
well know. I think Katrina and the national story gets told
around New Orleans in the breaching of the dam. The truth is,
in Mississippi, when Katrina came through, every light was out
around Mississippi Power.
And when you went in to try to restore that activity, the
streets were unrecognizable. You couldn't even use,
essentially, GPS to find your way around. All of the telecom
was out as well.
We have to have an interconnected effort between telecom
and electricity in order to most efficiently respond to these
sorts of disasters. Southern Company, as a matter of its own
resilient strategy, has our own dedicated telecom company
called Souther Linc, in which we can bring in mobile cells on
wheels, towers essentially, to set those things up.
As I am working within the context of the ESCC as it
relates to Puerto Rico, early on--and this is where the ESCC
was not asked to help in a mutual assistance effort--but,
still, we were working with different parts of the economy to
try to bring help to that island.
I called personally John Donovan. He is roughly the No. 2
guy at AT&T, as I understand it. And also, at--hold on--at
Verizon, Lowell McAdam, who is the CEO there, to link together
our efforts in bringing help down there. And we assured each
other that, between telecom and electricity, we would provide
every level of support, whether it was even asked for or not,
to try to get that situation rectified.
Congressman, it is critical. If we are going to communicate
with people in the field, if we are going to have people in the
field without telecom, we need some way to kind of communicate
to get the stuff back on. It is absolutely critical.
Mr. Harper. So, you provided assistance in that area, even
though it was not requested by PREPA?
Mr. Fanning. That is right. And in fact, I will give great
kudos to the folks at FEMA, whether it is Brock Long who has
done a heck of a job. I was on the floor of FEMA during a
weekend during this situation. Another guy that works in DHS,
Chris Krebs; in the White House, Tom Bossert, all of these
people have been champions in trying to aid the situation
without a whole lot of encouragement.
Mr. Harper. Got you.
You know, Southern Company is right in the middle of what I
guess we would call the hurricane belt. But Southern Company
has a long and good track record of restoration after a
hurricane, not only in your home service area, but helping your
neighbors, certainly through the ESCC and others.
Have you seen changes based on lessons after Katrina that
you are using today to improve that?
Mr. Fanning. Oh, sure. We have this mantra I had in my
opening statement. We want to be today better than yesterday;
tomorrow better than today. And no matter how good we think we
are, we can always be better, me included.
And we are accountable for always improving. When you think
about some of the testimony, life-and-death matters that are at
stake here, you know, it isn't just about electrons; it is
about restoring hope to communities and people's ways of life.
And so, we always work hard to think about what we can do
better. I think the latest iteration, whether it is Harvey,
whether it is Irma, the ESCC has demonstrated a much better
capability of working across not only investor-owned utilities,
munis, and coops, but also across cross-sector industries,
telecom, finance----
Mr. Harper. Right.
Mr. Fanning [continuing]. Water, et cetera. And so, those
are particularly good things.
The other thing is this whole notion--and we have heard a
lot about new technology being brought to bear. Good heavens,
we deployed that in terms of resiliency as a strategic
objective of America, whether it is cybersecurity, protection
against terrorists from a physical standpoint, but also against
natural disasters.
Mr. Harper. Fine. Thank you, Mr. Fanning.
My time has expired. I yield back, Mr. Chairman.
Mr. Olson. The gentleman yields back.
The Chair now calls upon the gentleman who made sure that
Texans signed Justin Verlander to get us through the playoffs
here, Gene Green, Texas 29.
[Laughter.]
Mr. Green. I wish I could claim, except going to a couple
of the games. But thank you, Mr. Chairman.
Mr. Thompson, you talk about how quickly refined production
was back online after Harvey. And I would like to commend the
job industry did in our district, because in east Harris County
we have five refineries. I sat down and met with Lyondell
refinery and, also, with Shell. And a lot of folks don't
understand you just can't turn switches off and on and get them
back up. But now the price of gas is going down because all
those refineries are back up. I know in our area--and I assume
over in Beaumont-Port Arthur also--I know a lot of my
constituents worked around the clock to get that back up.
One of the concerns I had, though, was the issue with the
tanks. In east Harris County, we have the tanks that are--we
keep building them because it is either holding crude or
product or whatever. The engineering of them now is a floating
roof. Because of the amount of water that hit the top of that,
it actually turned that top over, and water went into whatever
product was there. It could have been crude oil; it could have
been refined products, and emissions from that, but also
overflowing. Because when you get 52 inches of rain anywhere,
you are going to have a problem.
Has the industry looked at what we are going to do? I know,
talking with the two companies, they said, we are going to have
to look at it because how do we plan for 52 inches of rain. But
see if engineering-wise there is a way we don't repeat that
problem if we have another--well, not if; it is when we are
going to have another storm because on the Texas Gulf Coast--I
am a native Houstonian; we have lived through them, and we will
get through this, too, but it is not pretty. But we need to
learn from our mistakes if we have another 52-inch rain in
those plants.
Has there been talk about how, across from API--because,
like I said, just talking with two companies, they said they
had to look at it and see what is going on.
Mr. Thompson. Thank you for the remarks.
Yes, our industry, as I have said open remarks, we fared
fairly well. We proved to be resilient. We weren't perfect by
any stretch of the imagination. We were better prepared than we
were in prior storms. We have installed a lot of floating
roofs, which you know are better for the environment. In the
normal States, emissions are much lower.
But we weren't prepared for 60 inches of rain at times. And
so, some tanks did have some failures. But the key is that was
the exception and not the rule----
Mr. Green. Yes.
Mr. Thompson [continuing]. For sure. And I can assure you
that this is already a No. 1 topic of conversation, about to
prevent this going forward, and there will be lots of
discussion. And I am sure there will be engineering to make
sure these problems don't happen going forward, to the best we
can.
Mr. Green. OK. Can you talk a little bit about the
difference in how quickly the refining sector came back up
online, and the difficulty, how long it took for the
petrochemical sector in Houston?
Mr. Thompson. Yes. Well, certainly the refining industry
came back online a little bit more quickly. A lot of that was
from preparation. The petrochemical side, we knocked out, as
you know, 60 percent of the national capacity, 80 percent in
the Gulf. About 75 percent of that capacity has returned to the
industry. Some of our facilities, they were under lots of water
and it has taken a lot of time to get those facilities back up.
Repairs have had to be made, and that just takes time. But we
are well on our way. We think we have turned the corner and,
hopefully, we will be back up to full capacity soon.
Mr. Green. And I also know that you can tell that at the
price at the pump because the prices went up 25-30 cents a
gallon, but now it is back down, maybe not in Washington, but
at least in southeast Texas it has gone back down to maybe a
little higher than it was, but still it is not $2.49; it is
$2.19 that you can get on the side of the road now.
Mr. Thompson. And certainly we are getting back closer to
prehurricane levels, but one thing I will point out is, since
that time, the price of crude oil is certainly higher.
Mr. Green. Yes.
Mr. Thompson. And so, some of that is being reflected at
the pump as well.
Mr. Green. Yes.
I yield back, Mr. Chairman. Thank you.
Mr. Olson. The gentleman yields back.
The chairman now calls upon the House's best birdwatcher,
the man from the Commonwealth of West Virginia----
Mr. Griffith. Virginia.
Mr. Olson. I am sorry. Virginia. I am confused.
[Laughter.]
Mr. Griffith. You have been in the chair a long time.
[Laughter.]
I appreciate it.
Mr. Olson. Five minutes, my friend.
Mr. Griffith. Thank you very much.
Mr. Fanning, Mr. Harper touched on this a minute or two
ago, but making sure we have lines of communication up. The
National Infrastructure Advisory Council, noting this absolute
criticality that communications play in grid resilience,
suggested that electric utilities may need some dedicated
spectrum space. What do you think?
Mr. Fanning. Well, listen, there is a number of solutions
that go to that very important problem. Even to be provocative,
in the circumstance of a national emergency, should you have
dedicated internet access? There is a lot of things that you
need to clear the way for.
Let me just give great kudos. So many people today I think
lose faith in Government and the institution and the people
that run it, and all that. I can say without equivocation that,
in response to these events, whether it is in the White House
with Tom Bossert, whether it is Energy Secretary Perry, one of
the things that we can do is to work with these folks. And
these folks can clear the way to get the work done.
So often, I think the question goes to who is in charge.
You know who really knows how to get stuff done are the line
crews and the supervisors and the people that have the boots on
the ground to get this done. And when there are barriers, what
we have got to do is work in this effective public/private
partnership to get whatever barriers exist cleared away. The
Government in this case has been fabulous during Harvey and
Irma particularly.
Mr. Griffith. I appreciate that, and thank you for your
answer.
Mr. Rhymer, I was very pleased, as I was listening to your
testimony, to hear you talk about microgrids and what you all
are planning on doing. I particularly like the way you
described how you are going to have them interact with the full
system, and then, if they need to be standalone--I thought that
was very good and I appreciate it. I hope you all success in
that, and I look forward to seeing it at some point when it is
working, because I think that is helpful. Not just in the
islands, but in mountains and other regions of the United
States those kinds of concepts can be very, very helpful. So,
thank you for that.
Mr. Rhymer. Thank you.
Mr. Griffith. Mr. Nieves--did I say that close to right?
Thanks.
I appreciated your stark comments. It seems that there have
been a lot of problems with the electric utility in Puerto Rico
for some time, based on your comments. I am just wondering, you
know, the Federal Government is going to be asked to come in
there and spend a lot of money. I understand that and think
that is right. But, if we do so, are you willing--do you think
that the Government there, particularly the electric utility,
is going to be willing to introduce some of these novel
concepts like microgrids, and working on ways to use Puerto
Rico as a land of experiments where we can try different
things? They won't all necessarily work, but things that we can
do to try to make the grid better long time, and try out some
of these new ideas that are out there that have been talked
about for years, but we have never had an opportunity.
And for all the tragedy that is taking place in Puerto
Rico, for which I am very sorry and worry about figuring out
what we can do, we may have the opportunity to do something
better. Do you think that the utility company would be willing
to embrace some of that?
Mr. Nieves. Well, my proposal during testimony is that, if
the Federal Government is going to step up and allocate
considerable resources to not just repair the old grid, but to
create a new grid, you cannot do that alone. You have to also
establish a specific mandate in the law saying we are
appropriating this ``X'' amount of dollars to build a new grid
for Puerto Rico, but with these specifications.
And I respectfully submit that macrogrids could work;
regional microgrids for Puerto Rico could really work to create
a strong, resilient system. That might as well be ordered by
Federal law.
Under Puerto Rico local law that I worked on last year when
I was a senator, we authorized microgrids. And the Puerto Rico
Energy Commission is right now working on an expedited
regulation to put them in place. But I really submit that ``X''
amount of dollars appropriated by our Federal Government have
to be with a specific Federal mandate.
Mr. Griffith. And I appreciate that and would agree that we
are going to have to do some different things there. One of the
things that I think might help is if we have the utility
accountable to shareholders. I don't know how you would spin
that off with the assets they have. But I noticed from your
comments that one of the problems was that you had, while it
was a semi-regulated monopoly, it was a nonprofit. And it is
amazing, when you are trying to figure out ways to make
yourself more efficient, you come across ways to make at least
a little bit of profit, even if it is not required to be much
profit. Anyway, it is a thought to think about, and I hoped
that you would consider that as well.
And my time is way over. So, I have to yield back. Thank
you.
Mr. Nieves. Thank you.
Mr. Olson. The gentleman from the Commonwealth of Virginia
yields back.
The Chair now calls upon the gentleman from Amsterdam, New
York, Mr. Tonko, for 5 minutes.
[Laughter.]
Mr. Tonko. Thank you, Mr. Chair.
Mr. Rhymer, your testimony mentioned that the Water & Power
Authority had used FEMA hazardous litigation grants to bury
infrastructure underground, making it more resilient. When did
you receive those grants?
Mr. Rhymer. We received those grants approximately in 2010-
2011.
Mr. Tonko. OK.
Mr. Rhymer. And we have underground a portion of St. Thomas
and a portion of St. Croix. We are currently seeking additional
hazardous litigation grants currently to underground St. John
in the Cruz Bay area and additional parts of St. Thomas and St.
Croix.
Mr. Tonko. OK. And is there any other FEMA money you are
asking to secure beyond that burying of cable? Anything with
your microgrids? Are you requesting----
Mr. Rhymer. Well, we are seeking to get litigation grants
for the microgrid stuff, renewable energy stuff that actually
adds to the microgrid. We are also looking to do some hardening
of the system in terms of administration, in terms of the
buildings. Like the line department building is completely
destroyed. So, basically, we need to have that building be
resilient.
Mr. Tonko. Thank you.
New York State and the utilities there benefitted greatly
from mutual assistance in the aftermath of Superstorm Sandy.
And now, it is our turn to be called upon. It is your turn to
be called upon in making things better.
Mr. Fanning, do you believe the utility industry's mutual
assistance efforts work well?
Mr. Fanning. Oh, they are outstanding.
Mr. Tonko. I know islands present unique challenges to
mobilizing workers and equipment, but can you think of specific
reasons why mutual assistance would be resisted?
Mr. Fanning. No.
Mr. Tonko. OK. Mr. Nieves, you testified that Puerto Rico's
grid had limitations certainly in the amount of renewable
resources that could be integrated into its energy mix. What
were the reasons for that?
Mr. Nieves. Yes. According to a 2014 report that PREPA
received, the grid, as it stood before Maria, could only
integrate up to 580 megawatts of renewable power. Renewable
power has certain technical issues that the grid that we had
could not really tolerate without jeopardizing the system.
Mr. Tonko. Is it a matter of better interconnect devices?
There is technology already shelf-ready, I would believe, that
might be able to help----
Mr. Nieves. That is correct.
Mr. Tonko [continuing]. Your situation?
Mr. Nieves. Well, PREPA's grid was not a smart grid. It was
not a grid that could really accommodate a system whereby
customers are also generating power, renewable power, so they
are not just passive customers of our energy model. So,
according to that report from Siemens, PREPA's grid only can
tolerate up to that amount of renewable power, which is really
unacceptable, and a really small amount.
Mr. Tonko. And, Ms. Kennedy, thank you for making it so
clear that Puerto Ricans are still dealing with a life-and-
death situation. Can you further explain the health impacts you
have seen due to a lack of safe water in Puerto Rico?
Ms. Catherine Kennedy. Sure. Like I said, we were there for
about two weeks. One of the things that the nurses had to go
out and do was really within the community to take a look at
what kind of resources were available. Time and time again, it
was the lack of clean running water.
One of the things that the nurses saw was that people were
very desperate. So, they were actually drinking from river
water. Water that came down they would save from their roofs.
As you know, with hurricane, you have rodents and, of course,
bacteria. So, the prospect of leptospirosis was imminent. And
clearly, there were people that were infected, but, again, if
treated properly, then, I mean, it wouldn't be life
threatening. But these were things that we saw for the last two
weeks.
Mr. Tonko. Right. I have also seen some photos shared with
me by family members in my district. They cause grave concern.
I believe--and I think Ms. Kennedy would agree--that we
need to have a serious discussion about waiving cost-sharing
requirements, especially for critical public health
infrastructure such as our water systems. It is a public health
and public safety situation.
I would also express that Puerto Rico can learn a great
deal from New York's REV Initiative. It was in response to the
Superstorm Sandy situation. And that State, our State, my home
State, has worked to understand changes in the traditional
utility business model and how to plan for a more decentralized
grid.
My concern is that, if we build back to this failed system
that you cite, it is a very troublesome investment made by any
level of Government and the private sector, and we need to do
better than that and encourage smart, flexible, and reliable
grid for a cleaner and stronger energy future.
And with that, I yield back. And congratulations on last
night.
Mr. Olson. Thank you, thank you, thank you.
The gentleman yields back.
The Chair now calls upon the gentleman from our neighbor to
the north, Oklahoma, Mr. Mullin, for 5 minutes.
Mr. Mullin. Chairman, you are in almost a giddy form today.
I wonder why.
[Laughter.]
Mr. Olson. Guilty as charged.
Mr. Mullin. The best thing is the third baseman for the
Dodgers, I guess, can shave and cut his hair now, right?
Hey, I appreciate you guys coming up here and informing
Members of Congress. It is very important for us to have a
working relationship in a situation like this.
It has been a long day, and I appreciate your all's
patience. But I feel like we are going to continue to learn
from these lessons. What we don't want to do is get in the
habit of repeating them.
Mr. Fanning, if you don't mind, I would like to start with
you. The physical work of the restoration I know falls mainly
on industries, but what role does the Federal Government play
in this?
Mr. Fanning. Oh, they play an exceedingly important role.
As I described earlier, when I think about the role of the
ESCC, I describe it kind of in three levels. The first is to
harmonize the efforts of the Federal Government. This is truly
a public/private partnership, particularly in a super-regional
kind of disaster where we absolutely----
Mr. Mullin. When you talk about a private/private
partnership----
Mr. Fanning. Right.
Mr. Mullin [continuing]. Does the partnership end when the
Federal dollars are put in and, then, the utility companies
reap the benefits of it? Or do the Federal dollars, since it is
a partnership, get paid back?
Mr. Fanning. Listen, the partnership exists whether there
is a disaster or not.
Mr. Mullin. Sure.
Mr. Fanning. This is our, what we call, playbook.
Mr. Mullin. Right.
Mr. Fanning. This is our regime in which we respond to
cyber, physical security, or natural disasters. And what it
describes here is, frankly, not only the unity of effort, the
``what's'' of a restoration effort, but also the unity of
message and the ``how's'' around a restoration effort. That has
to be coordinated and harmonized between the Federal Government
and not only electricity in this case, but, as we said before,
the lifeline sectors. In cyberwarfare, it is going to be in the
context of finance, telecom, electricity. Broadly, it would
include transportation and water, and then, there are other
priorities going from that.
Don't ever forget the need to harmonize, also, State and
local government efforts, the boots on the ground that
ultimately will impact our ability to deliver.
Mr. Mullin. So, when we are talking about a partnership,
are we talking about just in financial support or, as you are
describing, all the above from the logistics behind it, from
the Federal Government stepping out and getting some of the red
tape out, letting you guys go to work, getting some waivers in
place?
Mr. Fanning. Yes, Congressman, absolutely right. In fact,
somebody else mentioned this National Infrastructure Advisory
Council made a recommendation to the President to form
something called a SICC, Strategic Infrastructure Coordinating
Council, of electricity----
Mr. Mullin. We have acronyms for everything around here.
[Laughter.]
Mr. Fanning. Yes. Yes, I know it.
Electricity, finance, telecom. And what we will do is bring
CEOs together, so me and others representing the electricity
sector, finance, telecom, to put together a common set of
regulatory permissions, legislative initiatives, harmonizing
technology systems, information-sharing, and physical
coordination. If we can get that done, that is an enormous
activity.
The other thing that I think we need to do is inform
policymakers like you all. And that is why I applaud this
effort. Because there is so much noise around these kinds of
disasters or potential disasters, we have to take action before
they get here. If all we are doing is reacting to the latest
disaster----
Mr. Mullin. Thank you.
Mr. Fanning [continuing]. We are way behind the ball.
Mr. Mullin. Yes.
Mr. Fanning. We have got to pitch, not catch.
Mr. Mullin. No, I agree with that. But look at that; wasn't
that neat. You get a little zing in there for our chairman.
Wow. That was thinking on your feet.
[Laughter.]
I agree with that. We would love to move to a point of
being more proactive than reactive, and take the lessons
learned. So, I actually applaud the idea of putting together
that committee, so to say, where we can say, ``Hey, look, this
is our lessons. These are what we need. These are the
roadblocks that need to be dropped. This is why it happens.''
And let's move forward, so we can react faster.
Mr. Fanning. And, Congressman, I think it needs to be CEO-
led. Eighty-seven percent of the critical infrastructure is
owned by private industry.
Mr. Mullin. Right.
Mr. Fanning. We have to work together.
Mr. Mullin. Mr. McBrayer, I have got just a short time
here. The EPA issued several fuel waivers----
Mr. McBrayer. Yes.
Mr. Mullin [continuing]. Along the way for diesel and
gasoline that maybe didn't meet the standards, but was able to
get delivered. Was it effective? Was that helpful?
Mr. McBrayer. I think it was effective and helpful at the
time. I think one of the things we have to adjust to as it
relates to getting fuel to folks who are your constituents, our
consumers, is that, at least in the Southeast, we are
transitioning from summer-grade gasoline to winter-grade
gasoline on September 15th every year. Because of the nature of
the two specifications, winter-grade gasoline is less costly
than summer-grade gasoline. So, whether your inventory is in
your store or whether you are a placeholder for inventory in a
terminal, the financial incentive is to diminish the amount of
supply that you have going into September 15 and 16 because you
are going to take in many cases a 10-to-15-cent devaluation of
that inventory, basically, at 12:01 a.m. on the 16th.
One of the things I would ask from a Federal perspective is
to take a look at that date. Is that really the only date that
we can in the Southeast convert from the lower-RVP to the
higher-RVP gasoline? Or is there a way to allow that date to
move from time or time, or be fixed, so that folks like
RaceTrac and other members of our association are not forced by
the changing cost to diminish inventories in a time where
hurricanes are more likely to occur?
Mr. Mullin. Thank you. That is a great point.
And, Mr. Chairman, thank you for entertaining a little bit
more time there. I yield back.
Mr. Olson. And seeing only Astros fans, but no further
Members seeking to ask questions, I would like to thank all of
our witnesses again for being here today.
I have a unanimous consent and our nine documents for the
record.
No. 1 is the PREPA letter to EEI and APPA.
No. 2 is an APPA letter to the Energy and Commerce
subcommittee on mutual aid.
No. 3 is an APPA and EEI letter to Mr. Ricardo L. Ramos
Rodriguez.
No. 4 is a letter from a farmer to the Energy and
Commerce's Energy Subcommittee.
No. 5 is the EIA supplemental testimony with
attachments.\1\
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\1\ The information has been retained in committee files and also
is available at http://docs.house.gov/meetings/IF/IF03/20171102/
106573/HHRG-115-IF03-20171102-SD003.pdf.
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No. 6, AdvaMed letter.
No. 7, letter from the FDA.
No. 8, GridWise Alliance document.
No. 9, letter to Senators Murkowski and Cantwell from the
former EPA official and Puerto Rico Energy Commissioner.
Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Rush. Mr. Chairman, I want to restate or reiterate my
request that PREPA be subpoenaed and that we have FEMA before
this subcommittee in the near future.
Mr. Olson. As I told my friend, I will carry that message
to Chairman Upton and Chairman Walden.
Pursuant to committee rules, I will remind members that
they have 10 business days to submit additional questions for
the record. As to the witnesses, submit their response in 10
business days upon receipt of those questions.
And one final comment, a point of personal privilege. You
guys have, it looks like, 23\1/2\ hours to get to Houston for
our big parade for our Astros.
[Laughter.]
Without objection, the subcommittee is adjourned.
[Whereupon, at 2:31 p.m., the subcommittee was adjourned.]
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