2017 Hurricane Season: Federal Support for Electricity Grid Restoration in the U.S. Virgin Islands and Puerto Rico
Released: 2019-04-18T00:00:00

Letter

Background

This section provides information on the electricity provider, impact of 2017 hurricanes, and status of electricity restoration in Puerto Rico and the U.S. Virgin Islands. Also, it describes FEMA’s Public Assistance Program.

Puerto Rico

Electricity provider. PREPA is a public power utility owned by the Commonwealth of Puerto Rico and a monopoly supplier of electricity in the commonwealth. It is also one of the nation’s largest public power utilities, serving approximately 1.5 million customers. PREPA was approximately $9 billion in debt prior to Hurricanes Irma and Maria, and its electric power infrastructure was known to be in poor condition, largely due to underinvestment and poor maintenance practices. In May 2018, we found that inadequate management of PREPA’s financial condition contributed to Puerto Rico’s persistent deficits. Specifically, PREPA did not update or improve its electric generation and transmission systems, which hampered their performance and led to increased costs of producing electricity that it did not fully pass on to consumers. In addition, Puerto Rico’s economy is in a prolonged period of economic contraction, and according to U.S. Census Bureau estimates, its population declined from a high of approximately 3.8 million people in 2004 to 3.3 million people in 2017, a decline of 12.8 percent. Along with the declining population, demand for electricity declined 18 percent from 2007 to 2017, according to PREPA.

Impact of 2017 hurricanes. Hurricanes Irma and Maria in September 2017 left Puerto Rico’s entire electricity grid inoperable, according to the economic and disaster recovery plan for Puerto Rico. According to a report by a working group that included utilities and national laboratories, among others, because of the extended and unprecedented damage, a significant portion of the generation, transmission, and distribution system must be rebuilt, including high-voltage transmission lines that often survive lower category hurricanes. While Puerto Rico’s population had already been declining, the migration of people from Puerto Rico accelerated following the hurricanes, according to PREPA.

Status of electricity restoration. According to PREPA, it took roughly 11 months for power to be restored to all of the customers able to receive power safely in Puerto Rico following the hurricanes. A PREPA official told us that PREPA’s estimates of customers with power restored are based on the number of meters that it knows are served by a given power line and on the number of meters it can read currently. Power has been restored to 100 percent of customers that are able to receive power safely, but this does not mean that all pre-storm customers have power restored, as some structures may not have been deemed safe for power restoration, according to PREPA officials. Figure 1 shows the percentage of customers with electricity restored in Puerto Rico beginning in January 2018 when PREPA was able to start estimating this information.

Although PREPA estimates that electricity had been restored to all customers by August 2018, in some instances electricity service has been supported by temporary generators, and outages have continued. For example, as of December 11, 2018, USACE was supporting seven generators that were supporting micro grids for the island municipalities of Vieques and Culebra. These islands had previously been served by an undersea transmission line connecting the islands to PREPA’s main grid on Puerto Rico. According to the U.S. Energy Information Administration, total electricity sales in Puerto Rico returned to pre–Hurricane Maria levels as of April and May 2018, although residential electricity sales appear to continue to lag historical levels, reflecting some continued outages.

U.S. Virgin Islands

Electricity provider. VIWAPA, a public utility, is a monopoly provider of electric power services in the U.S. Virgin Islands and serves approximately 55,000 customers throughout the territory. Like PREPA, VIWAPA faced financial challenges before the hurricanes. The USVI Hurricane Recovery and Resilience Task Force Report noted that VIWAPA has a 17 percent non-payment rate across its customer base, a significant unfunded pension liability, and long-term debt commitments of $265 million. In addition, the report states that the U.S. Virgin Island’s energy system faces many challenges that have led to higher rates and a historically unreliable grid. These include an aging, inefficient, and oversized infrastructure and heavy reliance on imported fossil fuels. The report also says that peak demand declined 18 percent from 2011 through 2017, driven by a variety of factors, including population decline. In addition, the report says that VIWAPA’s high energy rates and reliability issues have led some customers— particularly larger commercial and industrial ones—to leave the grid.

Impact of 2017 hurricanes. Hurricanes Irma and Maria damaged more than 90 percent of VIWAPA’s aboveground power lines and over 20 percent of VIWAPA’s generation capacity, according to the USVI Hurricane Recovery and Resilience Task Force Report. Specifically, the hurricanes damaged more than 20,000 poles and 1,100 miles of transmission and distribution lines, according to the report. Although 90 percent of VIWAPA’s above ground power lines were damaged, this was far fewer than the miles of transmission and distribution lines damaged in Puerto Rico.

Electricity status. According to VIWAPA, following the hurricanes, it took roughly 5 months for power to be restored to all of the eligible customers in the U.S. Virgin Islands. Eligible customers were those whose homes were safely able to receive power. Some homes had suffered substantial damage to their electrical infrastructure from the hurricanes and were not able to receive power safely until their electrical equipment was repaired. VIWAPA’s estimates of customers with power restored are based on the number of meters that VIWAPA knows are served by a given power line, as VIWAPA’s automated system for determining the percentage of customers without power was destroyed and is still being restored, according to a FEMA official. Although electricity service has been restored, electricity demand has not recovered to prestorm levels. According to the USVI Hurricane Recovery and Resilience Task Force Report, VIWAPA’s peak demand—the maximum energy load consumed by customers at any point in a year—was approximately 107 megawatts before the storms, but as of May 2018 it was 66 megawatts. The report says that demand will likely rebound to some degree as the territory rebuilds and recovers; however, it is unclear how quickly or by how much.

FEMA’s Public Assistance Program

FEMA, in leading the coordination of federal disaster response efforts, provides assistance through its Public Assistance Program to state, territorial, local, and tribal governments and certain types of private nonprofit organizations to assist them in responding to and recovering from major disasters or emergencies. FEMA Public Assistance Program funds can be provided for emergency work, such as for emergency protective measures that must be done immediately to protect public health and safety; permanent work, which includes the restoration of disaster-damaged management costs, which include indirect costs, administrative expenses, or other expenses that are not directly chargeable to a specific project and that a recipient or subrecipient incurs in administering and managing Public Assistance awards.

Generally, emergency work takes place for about 6 months following a disaster, while permanent work can take place over a decade, according to FEMA officials. FEMA can provide grants for both emergency and permanent work, and it can also provide direct federal assistance for emergency work. Under direct federal assistance, federal agencies directly perform or contract for the emergency work. FEMA’s Public Assistance Program allows for the federal government to provide direct assistance at the request of the state, territorial, and local governments when the impact of an incident is so severe that the state, territorial, and local governments lack the capability to perform or contract eligible emergency work. Under the Public Assistance Program and the Stafford Act, FEMA may mission assign—issue a work order that directs another federal agency, such as DOE or USACE to utilize its authorities and the resources granted to it under federal law—in support of this direct assistance to state, local, and territorial governments.

FEMA’s Community Disaster Loan Program

The Community Disaster Loan program provides loans to local governments that have suffered substantial loss of tax and other revenue in areas included in a major disaster declaration. The loan funding may be used for existing essential municipal functions and expanded functions required to meet disaster-related needs, but not for capital improvements or repair or restoration of damaged public facilities.

The Federal Role in Electricity Grid Restoration Was Unprecedented in Puerto Rico, and Various Factors Affected the Support Provided in Puerto Rico and the U.S. Virgin Islands

Federal agencies provided traditional support to restore electricity in response to Hurricanes Irma and Maria in both Puerto Rico and the U.S. Virgin Islands—such as providing temporary power for critical facilities. They also provided unprecedented support in Puerto Rico by helping to coordinate efforts to repair Puerto Rico’s electricity grid rather than primarily supporting the local utility’s efforts. Factors that affected the electricity grid restoration efforts in Puerto Rico and the U.S. Virgin Islands included logistical constraints, availability of materials, the financial condition of local utilities, and the unprecedented and extensive role of federal agencies. Appendix I provides timelines of federal and other efforts to support electricity grid restoration in Puerto Rico and the U.S. Virgin Islands after the 2017 hurricane season.

Federal Support Provided to Restore Electricity in Puerto Rico and the U.S. Virgin Islands in Response to the 2017 Hurricanes Included an Unprecedented Role for the Federal Government

Federal agencies assisted in the restoration of electricity after Hurricanes Irma and Maria in a variety of ways. FEMA provided billions in grants and direct federal assistance for electricity restoration. DOE provided subject matter expertise and coordination assistance. USACE provided temporary emergency power in Puerto Rico and the U.S. Virgin Islands. In addition, FEMA and USACE undertook unprecedented roles to help coordinate and directly assist with grid restoration in Puerto Rico.

Grants, direct federal assistance, and loans from FEMA. FEMA provided billions in grants and direct federal assistance to support electricity restoration in Puerto Rico and the U.S. Virgin Island through its Public Assistance Program. As public utilities, both PREPA and VIWAPA are eligible applicants for federal assistance through FEMA’s Public Assistance Program for the repair, restoration, and replacement of public facilities damaged or destroyed by a major disaster. As of July 20, 2018, FEMA had obligated approximately $3.2 billion for direct federal assistance through mission assignments and Public Assistance grant funds for electricity restoration in Puerto Rico and approximately $795 million for the U.S. Virgin Islands. This includes $2 billion that FEMA obligated for direct federal assistance through mission assignments to USACE for temporary emergency power and grid restoration efforts in Puerto Rico. In the U.S. Virgin Islands, FEMA obligated $63 million for direct federal assistance related to electricity restoration, most of which was obligated to USACE and DOE. Table 1 shows FEMA funding obligations for electricity restoration efforts in Puerto Rico and the U.S. Virgin Islands.

In addition, FEMA provided $75 million to VIWAPA through the Community Disaster Loan program as of July 20, 2018, according to FEMA officials. FEMA officials said that the most common use for Community Disaster Loan funds is payroll, and other examples of eligible uses include employee benefits, facilities maintenance costs, and normal operating materials.

Coordination and technical assistance from DOE. DOE received mission assignments from FEMA and deployed staff from its headquarters, site offices, and power marketing administrations to provide subject matter expertise and technical assistance in support of electricity grid damage assessments and power restoration efforts in both Puerto Rico and the U.S. Virgin Islands. According to DOE officials, DOE’s primary role in the response efforts on Puerto Rico and the U.S. Virgin Islands was coordination and provision of subject matter experts, as is typical for DOE’s role as the lead agency for the energy sector emergency support function. In Puerto Rico, however, DOE provided more advisors for a longer period of time than would be typical because of the extent of the damage to the electricity grid in Puerto Rico and PREPA’s limited capacity to respond, according to DOE officials. Specifically, DOE staffed up to 12 project support advisors to Puerto Rico from October 18, 2017, to August 8, 2018, and one supply chain support advisor from December 18, 2017, to March 16, 2018. These advisors provided subject matter expertise to USACE by reviewing construction plans and providing recommendations for prioritization, and scheduling and assisting in inventory management for incoming electrical grid equipment, among other things, according to DOE. In addition, in the U.S. Virgin Islands DOE deployed a team of 36 people from the Western Area Power Administration along with trucks and materials to help rebuild the electricity grid through a FEMA mission assignment. DOE officials told us that the department is also providing ongoing support on how to improve grid resilience as part of grid restoration and recovery efforts in both Puerto Rico and the U.S. Virgin Islands.

Temporary power from USACE. USACE provided temporary emergency power for critical facilities in Puerto Rico and the U.S. Virgin Islands. These temporary emergency power missions provided and maintained generators to deliver electricity to critical public facilities, such as hospitals and relief centers. After receiving a FEMA mission assignment to provide temporary emergency power in Puerto Rico, USACE deployed its Emergency Power Planning and Response Team, USACE government employees, soldiers from the 249th Engineer Battalion, and contractors. USACE installed a record number of emergency electric generators in Puerto Rico—over 2,300—through the end of May 2018. The previous record was 310 emergency generators installed in response to Hurricane Katrina. On May 17, 2018, FEMA approved the extension of the USACE mission assignment for emergency power to November 30, 2018. This extension permitted USACE to continue its support for the more than 700 generators still in use throughout Puerto Rico at that time. FEMA later extended the mission assignment until April 8, 2019. As of December 11, 2018, USACE was supporting 24 generators in Puerto Rico, seven of which were supporting micro grids for the island municipalities of Vieques and Culebra. In the U.S. Virgin Islands, USACE installed 180 generators as a part of its temporary emergency power mission. USACE’s temporary emergency power mission for the U.S. Virgin Islands was completed in February 2018, and USACE is no longer supporting generators there.

Unprecedented Roles by FEMA and USACE in Puerto Rico. In addition to the typical roles federal agencies undertake in restoration activities, FEMA and USACE undertook unprecedented roles in Puerto Rico because of the severe and widespread impacts of Hurricane Maria and PREPA’s limited capacity. For the first time in its history, FEMA undertook the role of helping to coordinate major electricity grid restoration because PREPA did not have the necessary capability, capacity, or structure to respond, according to FEMA officials. FEMA officials also noted that PREPA’s workers were not only engaged in restoration work but were also victims dealing with the same post- hurricane effects as the rest of the population.

As part of its response, FEMA mission assigned USACE to lead federal efforts to repair Puerto Rico’s electricity grid—a role USACE had not played in the past during a domestic disaster response. Specifically, on September 30, 2017, the FEMA Administrator tasked USACE with leading the planning, coordination, and integration of the grid restoration. FEMA assigned USACE to lead federal efforts and provide direct support for grid restoration because PREPA was overwhelmed and had liquidity issues and USACE had the structures in place to award contracts with and bring in grid restoration crews, according to FEMA officials. In order to carry out its mission assignment, USACE issued contracts to bring lineworkers and materials to Puerto Rico to support the reinstallation and repair of transmission and distribution lines, among other power restoration activities. As of June 30, 2018, USACE had obligated approximately $1.5 billion on these contracts. Figure 2 shows USACE and its contractors working to restore electricity in Puerto Rico. USACE’s grid restoration mission assignment from FEMA ended on May 18, 2018, because, according to FEMA officials, power had been restored to approximately 98 percent of customers and PREPA, with its remaining contractors, had adequate capability to do the remaining work.

In addition to the federal response, PREPA issued its own contracts to bring in additional lineworkers, received assistance from the New York State Utility Contingent, and requested and received mutual assistance from other utilities. PREPA did not initially reach out for mutual assistance. About 6 weeks following Hurricane Maria, on October 31, 2017, PREPA formally requested aid from other utilities on the mainland through the American Public Power Association and the Edison Electric Institute. The electric power industry sent two individuals to Puerto Rico on November 3, 2017 and they began assessing storm damage and working with PREPA, FEMA, USACE, and DOE officials to develop a restoration plan. On November 22, 2017, the Governor of Puerto Rico appointed one of these individuals as Power Restoration Coordinator to oversee the multipronged restoration effort. According to the Power Restoration Coordinator, as a first step he worked to create an incident command structure, and incident management teams began arriving in December. Once the incident command structure was in place, the industry deployed additional crews, equipment and materials in January to accelerate the ongoing restoration efforts across the island. As discussed previously, local utilities are typically responsible for restoring service, with federal agencies providing financial and other support. In contrast, approximately half of the lineworkers working to restore the electricity grid in Puerto Rico were USACE or USACE contractors at the peak of restoration efforts in February 2018, as shown in figure 3.

FEMA established a unified command structure to coordinate efforts of federal agencies, PREPA, PREPA’s contractors, the New York State Utility Contingent, and utilities providing mutual assistance to PREPA, to help target priority work, ensure that crews could get to the work, and identify needed materials. Figure 4 shows the unified command structure.

Logistical Challenges and Other Factors Affected Federal Support to Restore Electricity

According to documents we reviewed and our interviews with officials and representatives, the most commonly cited factors that affected federal electricity grid restoration efforts in Puerto Rico and the U.S. Virgin Islands included (1) logistical challenges, (2) availability of materials, (3) financial condition of local utilities and poor condition of existing infrastructure, and (4) the extensive and unprecedented role of federal agencies.

Logistical challenges. Responding to disasters on islands presents a number of logistical challenges. Specifically, according to federal officials, getting the crews, equipment, and materials needed to support restoration efforts to an island was more difficult and time- consuming than doing so on the mainland. This includes prepositioning assets, such as generators, and delivering equipment and materials in advance of a storm. The difficulties were greater in the days following the hurricanes since neither the ports nor the airports in Puerto Rico and the U.S. Virgin Islands had power, which prevented the delivery of materials to the islands. In Puerto Rico, the Port of San Juan reopened for daylight operations 3 days after Hurricane Maria made landfall; every airport and seaport had limited capacity after reopening for approximately 7 days post-landfall, according to FEMA’s 2017 Hurricane Season After-Action Report. Federal officials in the U.S. Virgin Islands told us that they faced further delays locating key supplies because of inadequate labelling of shipping containers at the port. For example, some containers were marked only as disaster supply equipment, which did not sufficiently identify the contents within them. According to USACE’s 2018 Remedial Action Program Senior Leader Briefing, USACE lacked the expertise and capabilities to manage the large operational logistics requirements to support the Puerto Rico and U.S. Virgin Islands response.

Availability of materials. The sequence of three hurricanes making landfall in the United States in 2017 and the need to restore electricity service in Texas, Florida, and elsewhere, in addition to Puerto Rico and the U.S. Virgin Islands, complicated the restoration effort in the two territories. Since utilities in all affected areas were acquiring materials to restore electricity service, demand for these materials increased and available supplies were generally low; in some instances materials were only available as they were manufactured. Few, if any, materials were stockpiled locally on Puerto Rico. In addition, some of the equipment used in Puerto Rico was not standard in the continental United States and required ordering of specialized materials, resulting in delays in the restoration process. The U.S. Virgin Islands also faced supply issues, which became worse once grid recovery work in Puerto Rico began.

Financial condition of local utilities and poor condition of existing infrastructure. Electric utilities in both Puerto Rico and the U.S. Virgin Islands were insolvent, which led to a lack of maintenance and presented its own challenges for restoring the grids after the storms. Specifically, PREPA was approximately $9 billion in debt before the 2017 hurricane season, with annual costs that exceeded its revenues. Puerto Rico’s electric power infrastructure was in poor condition before the 2017 hurricane season largely because of PREPA’s underinvestment and poor maintenance practices. For example, PREPA canceled its vegetation management program because of its financial situation; this contributed to the destruction of transmission and distribution lines when the hurricane arrived, according to FEMA officials.

Similarly, in the U.S. Virgin Islands, financial challenges contributed to the extent of the damage to grid infrastructure. Specifically, VIWAPA officials told us that VIWAPA’s financial challenges prevented certain infrastructure improvements and a large proportion of the electricity poles were at or above their weight capacity, increasing the likelihood and extent of wind damage during the hurricanes. According to VIWAPA officials, VIWAPA was aware that there were too many lines and heavy transformers on old poles, but was not in a position to address this concern prior to the hurricanes.

Extensive and unprecedented role of federal agencies. FEMA did not anticipate or plan for the extensive role that it and USACE played in grid restoration in Puerto Rico. According to FEMA’s after action report for the 2017 hurricane season, FEMA’s planning assumptions for a hurricane, earthquake, or tsunami striking Puerto Rico and the U.S. Virgin Islands underestimated the actual requirements. As discussed above, prior to Hurricane Maria in Puerto Rico, USACE had never worked on a large-scale power restoration as part of a domestic disaster response and did not have expertise in this area, according to USACE officials. This affected grid restoration efforts. For example, USACE did not have a grid restoration contract in place to immediately initiate grid repair efforts, according to USACE officials. Rather, USACE issued an order off of a pre-existing contract that it had under its public works and engineering support function to bring electric utility lineworkers to Puerto Rico. According to USACE officials, a bid protest against one of USACE’s contracts delayed its ability to increase the contract to bring more lineworkers to Puerto Rico. In addition, the contract review and approval process USACE used to obtain supplies took longer than it would typically take utilities to get supplies, according to FEMA officials we interviewed. According to USACE officials, USACE followed federal acquisition regulations, which is a slow process compared to private party purchases. USACE officials said that USACE is considering looking at what would be needed to create an advance grid restoration contract.

FEMA, USACE, and DOE identified potential actions to address these challenges. According to its after action report, FEMA plans to establish a standing interagency Power Task Force to coordinate with DOE, USACE, and state and local governments and provide crisis planning for the energy sector emergency support function to support the restoration of power during future national response efforts. USACE’s 2018 Remedial Action Program Senior Leader Briefing made recommendations to improve contingency contracting and operational logistics, among other things. Specifically, recommendations included that USACE review existing and planned advance contracts and make adjustments as necessary to increase capacity and improve capabilities, and that USACE work with FEMA to convene an interagency logistics planning team and identify logistics contracting gaps and propose government and private sector solutions. DOE’s after action report for the 2017 hurricane season says that the lessons learned from the response to Hurricane Maria may prompt some programmatic improvements to the energy sector emergency support function roles and responsibilities related to island response, among other potential improvements. In addition, the report states that because of the extensive damage to grid infrastructure and the length of the restoration and recovery, there is an increasing need to incorporate resilience and hardening into restoration, recovery, and mitigation planning and execution.

Agency Comments

We provided a draft of this report to the Department of Defense (DOD), the Department of Homeland Security (DHS), DOE, and the governments of Puerto Rico and the U.S. Virgin Islands for review and comment. In its comments, reproduced in appendix II, DHS indicated that a top priority of DHS, FEMA and the entire federal government has been to provide life safety and life-sustaining resources to Puerto Rico and the U.S. Virgin Islands, including efforts to restore power and stabilize critical infrastructure. DHS, DOD, and DOE also provided technical comments, which we incorporated as appropriate.

We are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the Secretary of Energy, the Secretary of Homeland Security, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.

Appendix I: Timelines of Federal and Other Efforts to Support Electricity Grid Restoration

See figures 5 and 6 for a timeline of federal and other efforts to support electricity grid restoration in Puerto Rico and the U.S. Virgin Islands after the 2017 hurricane season.

Appendix II: Comments from the Department of Homeland Security

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Quindi Franco (Assistant Director), Marya Link (Analyst in Charge), Janice Ceperich, William Gerard, Cindy Gilbert, Joseph Maher, David Marroni, Bolko Skorupski, Sheryl Stein, and Jarrod West made key contributions to this report.