Tag Archives: Power Grid

Texas power grid passes test, more to come as heat wave lingers

(Reuters) – The Texas power grid passed the first of what could be many tests over the next week by meeting very high demand on Monday without problems as homes and businesses cranked up their air conditioners to escape the latest heat wave.

The United States has been beset by extreme weather events this year, including February’s freeze in Texas that knocked out power to millions, and record heat in the Pacific Northwest earlier this summer.

High temperatures over the next week were expected to reach the mid 90s Fahrenheit (35 Celsius) in Houston and the low 100s in Austin, Dallas and San Antonio, according to AccuWeather.

The Electric Reliability Council of Texas (ERCOT), which operates the grid in most of the state, said power use hit a preliminary 72,856 megawatts (MW) on Monday and would reach 72,925 MW on July 30, 73,275 MW on Aug. 1 and 74,160 MW on Aug. 2.

Those peaks were lower than ERCOT forecast on Monday and would remain below July’s 74,244-MW record and the all-time high of 74,820 MW in August 2019. One megawatt can power around 200 homes in the summer.

Officials at ERCOT were not immediately available to say if Monday’s peak was the highest this year.

ERCOT has already broken monthly records, including 70,219 MW in June and 69,692 MW in February when millions of Texans were left without power, water and heat for days during a deadly storm as ERCOT scrambled to prevent an uncontrolled collapse of the grid after an unusually large amount of generation shut.

Despite Monday’s high demand, real-time prices remained below $100 per megawatt hour (MWh).

That compares with an average of $208/MWh at the ERCOT North so far in 2021 due primarily to price spikes over $8,000 during the February freeze. The 2020 average was just $26.

(Reporting by Scott DiSavino; Editing by Steve Orlofsky)

Nuclear, coal bailout worth any cost ‘to keep America free’: U.S. energy chief

FILE PHOTO: Power lines in Hinsdale, New Hampshire, lead away from the Vermont Yankee nuclear power plant (C rear) in Vernon, Vermont August 27, 2013. REUTERS/Brian Snyder

By Richard Valdmanis

WASHINGTON (Reuters) – U.S. Energy Secretary Rick Perry said on Thursday that bailing out struggling coal and nuclear power plants is as important to national security as keeping the military strong, and that the cost to Americans should not be an issue.

“You cannot put a dollar figure on the cost to keep America free,” he told reporters at a press conference in Washington, when asked how much the administration’s effort to extend the lives of the facilities would cost. When asked about the cost of a potential bailout, he said he did not yet know.

“We look at the electricity grid as every bit as important to (national security) as making sure we have the right number of ships, aircraft and personnel,” he said. “What is your freedom worth?”

President Donald Trump ordered the DOE to take emergency measures to slow the retirements of coal and nuclear power plants, arguing those kinds of facilities can store months of fuel on site and therefore withstand supply disruptions that could be caused by storms, hacks, or physical attacks.

Aging coal and nuclear facilities have been shuttering at a rapid pace in recent years, pushed out by cheaper natural gas as well as renewable energy sources like wind and solar.

The Trump administration considers renewable energy vulnerable, because gas-fired plants rely on pipelines that can be disrupted, and solar and wind facilities only produce energy under certain weather conditions.

Perry said nearly all U.S. military bases rely on power from the civilian grid.

The emerging grid policy fits neatly with the administration’s broader agenda to boost U.S. fossil fuels production and to save the coal industry.

The DOE is currently studying ways to bail out coal and nuclear facilities, including potentially by mandating grid operators to purchase power from them.

Cyber experts have questioned the reasoning behind a potential bailout. They said it will not toughen the U.S. power grid against cyber attacks because hackers have a wide array of options for hitting electric infrastructure and nuclear facilities that are high-profile targets.

Perry said the DOE is examining the costs now.

“We don’t have a dollar estimate at this particular point.”

(Writing by Richard Valdmanis; Editing by David Gregorio)

Puerto Rico power grid braces for hurricane season

Jose Alvarez, 60, uses a head lamp while walking in the dark as the island's fragile power system is still reeling from the devastation wrought by Hurricane Maria eight months ago, in Jayuya, Puerto Rico May 10, 2018. REUTERS/Alvin Baez

By Jessica Resnick-Ault and Nick Brown

NEW YORK (Reuters) – The U.S. federal agency tasked with restoring electricity to Puerto Rico, after Hurricane Maria hit the Caribbean last year, is leaving the island though thousands still have no power heading into the next hurricane season starting next month.

Only a last-minute request from the governor of the island, bemoaning the “fragile state” of the power grid, managed to keep most of the generators brought by the Federal Emergency Management Agency (FEMA) on Puerto Rican soil for another six months.

The remaining generators might help keep the lights on for hospitals or police stations if the island gets hit again during the coming hurricane season, which begins June 1.

Contractors of the U.S. Army Corps of Engineers install an electricity pole as the island's fragile power system is still reeling from the devastation wrought by Hurricane Maria eight months ago, in Utuado, Puerto Rico May 17, 2018. REUTERS/Alvin Baez

Contractors of the U.S. Army Corps of Engineers install an electricity pole as the island’s fragile power system is still reeling from the devastation wrought by Hurricane Maria eight months ago, in Utuado, Puerto Rico May 17, 2018. REUTERS/Alvin Baez

Hurricane Maria devastated Puerto Rico last September, leaving 1.5 million homes and businesses in the dark. Both the island’s power utility and the Trump Administration’s Federal Emergency Management Agency were criticized for a slow response.

Most power has been restored by the U.S. Army Corps of Engineers but the electricity grid remains unreliable, and suffered an island-wide blackout last month.

“The whole world is very nervous about hurricane time,” said Rosalina Abreu Gonzalez, who lives near Mariana, on the eastern side of the island, where power has still not been restored. “There is a real concern – the government hasn’t provided an energy system that is more secure.”

The Army Corps, a unit of the U.S. armed forces, has said its task is largely complete now that most people have power. About 22,000 customers are still without electricity, most in remote areas, according to the new head of the island’s power utility, the Puerto Rico Electric Power Authority.

“Our mission wasn’t to build a modern resilient system,” Charles Alexander, Director of Contingency Operations and Homeland Security Headquarters at the Army Corps, said at a Senate hearing last week.

On April 29, Governor Ricardo Rossello asked U.S. officials to leave behind 850 generators at critical facilities, along with three larger generators used to keep the grid stable. FEMA agreed to leave the mega-generators and generators for 700 critical facilities. Mega-generators supply 75 megawatts of power, enough to power 75,000 homes.

New PREPA Chief Executive Walter Higgins, who has only been on the job for two months, said he is focusing on emergency procedures in the event of another disaster in coming months.

He said there is a plan for building a more resilient grid in the future. Higgins took over from Ricardo Ramos, who resigned as CEO in November after coming under fire for signing unvetted, little-known contractors to restore power, rather than immediately ask for assistance from other utilities.

“Unfortunately, pain causes learning, and what we’ve learned is how to get mutual assistance called for and on the island immediately,” Higgins told Reuters.

Residents of La Chorrera neighbourhood carry an electricity pole as the island's fragile power system is still reeling from the devastation wrought by Hurricane Maria eight months ago, in Utuado, Puerto Rico May 11, 2018. REUTERS/Alvin Bae

Residents of La Chorrera neighbourhood carry an electricity pole as the island’s fragile power system is still reeling from the devastation wrought by Hurricane Maria eight months ago, in Utuado, Puerto Rico May 11, 2018. REUTERS/Alvin Baez

Still, PREPA’s grid lacks buried power lines or reinforced poles, common in other hurricane prone areas. The power utility ran up an $8 billion debt over many years, largely due to poor bill collection, causing the system to fall into disrepair.

“It is very hard to see these messages where the government is saying we’re ready for next season. We’re not,” said Sheylda Diaz, a biology professor who lives near Utuado, in the island’s center, where some lines and poles have yet to be fixed.

The Army Corps will not provide further line restoration after Friday, FEMA said.

“People here have no idea that they are leaving,” said Abreu Gonzalez, who runs a center where people without power can go for meals.

Higgins said he sympathizes with those who want the Corps to remain. “I can understand why somebody would want them to stay longer, as long as there’s a single customer out.”

Maria hit shortly after Hurricanes Harvey and Irma slammed the U.S. mainland in 2017, but in both cases, power was largely restored within a week.

“I cannot imagine a scenario where 20,000-plus Texans or 20,000 Floridians were without power and FEMA would make that decision,” said Sen. Martin Heinrich, a Democrat from New Mexico. “I think that’s reprehensible.”

(Reporting By Jessica Resnick-Ault; Editing by Diane Craft)

In a first, U.S. blames Russia for cyber attacks on energy grid

An electrical line technician works on restoring power in Vilonia, Arkansas April 29, 2014. REUTERS/Carlo Alle

By Dustin Volz and Timothy Gardner

WASHINGTON (Reuters) – The Trump administration on Thursday blamed the Russian government for a campaign of cyber attacks stretching back at least two years that targeted the U.S. power grid, marking the first time the United States has publicly accused Moscow of hacking into American energy infrastructure.

Beginning in March 2016, or possibly earlier, Russian government hackers sought to penetrate multiple U.S. critical infrastructure sectors, including energy, nuclear, commercial facilities, water, aviation and manufacturing, according to a U.S. security alert published Thursday.

The Department of Homeland Security and FBI said in the alert that a “multi-stage intrusion campaign by Russian government cyber actors” had targeted the networks of small commercial facilities “where they staged malware, conducted spear phishing, and gained remote access into energy sector networks.” The alert did not name facilities or companies targeted.

The direct condemnation of Moscow represented an escalation in the Trump administration’s attempts to deter Russia’s aggression in cyberspace, after senior U.S. intelligence officials said in recent weeks the Kremlin believes it can launch hacking operations against the West with impunity.

It coincided with a decision Thursday by the U.S. Treasury Department to impose sanctions on 19 Russian people and five groups, including Moscow’s intelligence services, for meddling in the 2016 U.S. presidential election and other malicious cyber attacks.

Russia in the past has denied it has tried to hack into other countries’ infrastructure, and vowed on Thursday to retaliate for the new sanctions.

‘UNPRECEDENTED AND EXTRAORDINARY’

U.S. security officials have long warned that the United States may be vulnerable to debilitating cyber attacks from hostile adversaries. It was not clear what impact the attacks had on the firms that were targeted.

But Thursday’s alert provided a link to an analysis by the U.S. cyber security firm Symantec last fall that said a group it had dubbed Dragonfly had targeted energy companies in the United States and Europe and in some cases broke into the core systems that control the companies’ operations.

Malicious email campaigns dating back to late 2015 were used to gain entry into organizations in the United States, Turkey and Switzerland, and likely other countries, Symantec said at the time, though it did not name Russia as the culprit.

The decision by the United States to publicly attribute hacking attempts of American critical infrastructure was “unprecedented and extraordinary,” said Amit Yoran, a former U.S. official who founded DHS’s Computer Emergency Response Team.

“I have never seen anything like this,” said Yoran, now chief executive of the cyber firm Tenable, said.

A White House National Security Council spokesman did not respond when asked what specifically prompted the public blaming of Russia. U.S. officials have historically been reluctant to call out such activity in part because the United States also spies on infrastructure in other parts of the world.

News of the hacking campaign targeting U.S. power companies first surfaced in June in a confidential alert to industry that described attacks on industrial firms, including nuclear plants, but did not attribute blame.

“People sort of suspected Russia was behind it, but today’s statement from the U.S. government carries a lot of weight,” said Ben Read, manager for cyber espionage analysis with cyber security company FireEye Inc.

ENGINEERS TARGETED

The campaign targeted engineers and technical staff with access to industrial controls, suggesting the hackers were interested in disrupting operations, though FireEye has seen no evidence that they actually took that step, Read said.

A former senior DHS official familiar with the government response to the campaign said that Russia’s targeting of infrastructure networks dropped off after the publication in the fall of Symantec’s research and an October government alert, which detailed technical forensics about the hacking attempts but did not name Russia.

The official declined to say whether the campaign was still ongoing or provide specifics on which targets were breached, or how close hackers may have gotten to operational control systems.

“We did not see them cross into the control networks,” DHS cyber security official Rick Driggers told reporters at a dinner on Thursday evening.

Driggers said he was unaware of any cases of control networks being compromised in the United States and that the breaches were limited to business networks. But, he added, “We know that there is intent there.”

It was not clear what Russia’s motive was. Many cyber security experts and former U.S. officials say such behavior is generally espionage-oriented with the potential, if needed, for sabotage.

Russia has shown a willingness to leverage access into energy networks for damaging effect in the past. Kremlin-linked hackers were widely blamed for two attacks on the Ukrainian energy grid in 2015 and 2016, that caused temporary blackouts for hundreds of thousands of customers and were considered first-of-their-kind assaults.

Senator Maria Cantwell, the top Democrat on the Senate Energy and Natural Resources Committee, asked the Trump administration earlier this month to provide a threat assessment gauging Russian capabilities to breach the U.S. electric grid.

It was the third time Cantwell and other senators had asked for such a review. The administration has not yet responded, a spokesman for Cantwell’s office said on Thursday.

Last July, there were news reports that the Wolf Creek Nuclear Operating Corp, which operates a nuclear plant in Kansas, had been targeted by hackers from an unknown origin.

Spokeswoman Jenny Hageman declined to say at the time if the plant had been hacked but said that there had been no operational impact to the plant because operational computer systems were separate from the corporate network. Hageman on Thursday said the company does not comment on security matters.

John Keeley, a spokesman for the industry group the Nuclear Energy Institute, said: “There has been no successful cyber attack against any U.S. nuclear facility, including Wolf Creek.”

(Reporting by Dustin Volz and Timothy Gardner, additional reporting by Jim Finkle; Editing by Tom Brown, Alistair Bell and Cynthia Osterman)

U.S. Energy Department forming cyber protection unit for power grids

Former Texas Governor Rick Perry, U.S. President-elect Donald Trump's pick to lead the Department of Energy, meets with Senate Majority Leader Mitch McConnell (R-KY) on Capitol Hill in Washington, U.S. January 4, 2017. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) – The U.S. Department of Energy (DOE) said on Wednesday it is establishing an office to protect the nation’s power grid and other infrastructure against cyber attacks and natural disasters.

President Donald Trump’s budget proposal unveiled this week included $96 million in funding for the Office of Cybersecurity, Energy Security, and Emergency Response.

Energy Secretary Rick Perry said the DOE “plays a vital role in protecting our nation’s energy infrastructure from cyber threats, physical attack and natural disaster, and as secretary, I have no higher priority.”

Last July, the DOE helped U.S. firms defend against a hacking campaign that targeted power companies including at least one nuclear plant. The agency said that the attacks did not have an impact on electricity generation or the grid, and that any impact appeared to be limited to administrative and business networks.

The previous month, the U.S. Department of Homeland Security and the Federal Bureau of Investigation had issued an alert to industrial companies, warning that for months hackers had targeted nuclear reactors and other power industry infrastructure, using tainted emails to harvest credentials and gain access to networks.

In some cases hackers succeeded in compromising the networks of their targets, but the report did not identify specific victims.

Nuclear power experts, such as Dave Lochbaum at the Union of Concerned Scientists nonprofit group, have said reactors have a certain amount of immunity from cyber attacks because their operation systems are separate from digital business networks. But over time it would not be impossible for hackers to potentially do harm, he said.

(Reporting by Timothy Gardner; Editing by Jeffrey Benkoe)

Puerto Rico governor knocks U.S. Army Corps response to restoring power after hurricane

Cars drive under a partially collapsed utility pole, after the island was hit by Hurricane Maria in September, in Naguabo, Puerto Rico

By Nick Brown and Jessica Resnick-Ault

NEW YORK (Reuters) – Puerto Rico Governor Ricardo Rossello said the U.S. Army Corps of Engineers lacked urgency in restoring power to the storm-hit island, and that it was pushing the clean-up effort down the road.

The Army Corp was tasked as the leading federal agency to oversee power restoration in Puerto Rico about a week after the U.S. territory was devastated by Hurricane Maria.

Speaking to Reuters on a trip to New York, where he plans to meet Governor Andrew Cuomo, Rossello deflected to the Army Corps some of the criticism his administration has faced since Maria made landfall on Sept. 20.

Rossello and the island’s power authority, PREPA, were criticized for initially declining to seek so-called mutual aid from other U.S. public power utilities after the storm knocked out electricity to all of Puerto Rico’s 3.4 million residents.

That decision has become a focal point because it partly spurred PREPA to sign a no-bid contract with private firm Whitefish Energy Holdings – a deal Rossello canceled on Sunday after an uproar over its provisions.

Rossello has since sought mutual aid from utilities in New York and Florida.

But the initial decision to forgo it, he said on Thursday, was due in part to an understanding with the Army Corps that it could help restore power to Puerto Rico within 45 days, and would foot the bill at a time when the island’s bankrupt government could not afford to shell out much cash.

Six weeks after the storm, only about 30 percent of the island’s grid has been restored.

“We are very unsatisfied with the urgency the Corps” has shown, Rossello said. “Everything that has been done right now has been done by PREPA or the subcontractors PREPA has had.”

Jeff Hawk, a spokesman for the Army Corps, said in an emailed statement that “contracts usually take days to a couple of weeks, so we are moving quickly.”

Rossello also said he had some concerns about new parameters laid out on Tuesday by the federal board managing Puerto Rico’s finances, which would require his administration to submit a revised draft of a fiscal turnaround plan for the island by Dec. 22.

“We are in the process of answering to the board some of our concerns with the timelines,” Rossello said, adding that some of the parameters “are appropriate, and some are not, given the lack of information and the level of devastation in Puerto Rico.”

Puerto Rico filed the largest government bankruptcy in U.S. history this year to restructure $72 billion in debt.

Rossello said the revised plan would be centered around a strategy of reducing the size of government, boosting private sector partnerships, and reforming education and healthcare systems.

 

(Reporting by Nick Brown; Editing by Chizu Nomiyama and Susan Thomas)

 

Schumer calls on Trump to appoint official to oversee Puerto Rico relief

Senate Minority Leader Charles Schumer (D-NY) departs after a full-Senate briefing by Deputy U.S. Attorney General Rod Rosenstein at the U.S. Capitol in Washington

By Pete Schroeder

WASHINGTON (Reuters) – Charles Schumer, the top Democrat in the U.S. Senate, called on President Donald Trump on Sunday to name a single official to oversee and coordinate relief efforts in hurricane-ravaged Puerto Rico.

Schumer, along with Representatives Nydia Velàzquez and Jose Serrano, said a “CEO of response and recovery” is needed to manage the complex and ongoing federal response in the territory, where millions of Americans remain without power and supplies.

In a statement, Schumer said the current federal response to Hurricane Maria’s impact on the island had been “disorganized, slow-footed and mismanaged.”

“This person will have the ability to bring all the federal agencies together, cut red tape on the public and private side, help turn the lights back on, get clean water flowing and help bring about recovery for millions of Americans who have gone too long in some of the worst conditions,” he said.

The White House did not immediately respond to a request for comment.

The Democrats contended that naming a lone individual to manage the government’s relief efforts was critical, particularly given that the Federal Emergency Management Agency is already stretched thin from dealing with other crises, such as the aftermath of Hurricane Harvey in Texas and the wildfires in California.

The severity of the Puerto Rico crisis, where a million people do not have clean water and millions are without power nearly a month after Hurricane Maria made landfall, demand a single person to focus exclusively on relief and recovery, the Democrats said.

Forty-nine people have died in Puerto Rico officially, with dozens more missing. The hurricane did extensive damage to the island’s power grid, destroying homes, roads and other vital infrastructure. Now, the bankrupt territory is struggling to provide basic services like running water, and pay its bills.

“It’s tragically clear this Administration was caught flat footed when Maria hit Puerto Rico,” said Velàzquez. “Appointing a CEO of Response and Recovery will, at last, put one person with authority in charge to manage the response and ensure we are finally getting the people of Puerto Rico the aid they need.”

On Thursday, Trump said the federal response has been a “10” on a scale of one to 10 at a meeting with Puerto Rico Governor Ricardo Rossello.

The governor has asked the White House and Congress for at least $4.6 billion in block grants and other types of funding.

Senator Marco Rubio called on Congress to modify an $18.7 billion aid package for areas damaged by a recent swath of hurricanes to ensure that Puerto Rico can quickly access the funds.

 

(Reporting by Pete Schroeder; Editing by Lisa Von Ahn and Diane Craft)

 

U.S. mail carriers emerge as heroes in Puerto Rico recovery

Luis Menendez, a mail man for the U.S. Postal Service, delivers mail at an area affected by Hurricane Maria in the island of Vieques, Puerto Rico.

By Hugh Bronstein

GUAYNABO, Puerto Rico (Reuters) – With the Puerto Rico power grid shredded by Hurricane Maria, the U.S. Postal Service has taken the place of cellphone service at the forefront of island communications.

Only 15 percent of electrical power has been restored since the storm bludgeoned the U.S. territory on Sept. 20, but 99 of Puerto Rico’s 128 post offices are delivering mail. Tents have taken the place of post offices wrecked by Maria.

Mail carriers gather information on sick and elderly residents in far-flung parts where hospitals have closed. Data is fed into the Federal Emergency Management Agency disaster relief office in San Juan so medical attention can be provided.

Restoration of the power grid is months away and many rural roads are blocked by mudslides, sink holes and downed trees and telephone poles. Since the start of the month the Postal Service has nonetheless been delivering letters and care packages to family members desperate for news.

“It’s been a clutch situation, and you guys have totally come through,” a FEMA worker was heard telling Postal Service Caribbean customer service manager Martin Caballero on Sunday.

“We might know the general area where people need help, but the mail carriers are the only ones who really have the exact addresses,” the FEMA worker told Reuters, asking not to be named because he was not authorized to speak to news media.

Caballero regularly goes on AM radio, which can be heard by listeners lucky enough to have diesel to run generators, to tell people in inaccessible parts of the island where their mail is being held. He invites them to pick it up, but only when travel conditions become safe.

Even for urban middle-class customers in the San Juan suburb of Guaynabo, whose concrete homes were not smashed by the storm, it was a chore to recover their blown-away mailboxes or build new ones. Hurricane or not, the Postal Service will not drop off mail without a designated box.

“The wind took them all,” said resident Jenny Amador, a 42-year-old teachers’ assistant.

“I found mine in those trees,” she said, pointing to a gnarl of branches and trunks on the road. She re-attached her mailbox in a cockeyed position in front of her house, using a clothes hanger.

One plucky woman, having heard the postman was on the way, stood stoically with her mailbox tucked under her arm. No one minded when mail carrier Alfredo Martinez showed up out of uniform, unable to do laundry for lack of clean water.

One resident said the return of the mail service was comforting, a sign of a return to normalcy. But another greeted Martinez with a warning.

“If you are bringing me any utility bills, go away,” she said.

 

(Reporting by Hugh Bronstein; Editing by Howard Goller)

 

Puerto Rico governor: ‘hell to pay’ over water, food deliveries

The contents of a damaged home can be seen near the town of Comerio.

WASHINGTON (Reuters) – Puerto Rico Governor Ricardo Rossello said on Monday he ordered an investigation of water distribution on the hurricane-battered island and warned that there would be “hell to pay” for mishandling of the supplies.

In an interview with CNN, Rossello said drinking water supplies have been restored to roughly 60 percent of the island but some areas in the north remained at only 20 percent nearly three weeks after Hurricane Maria hit the U.S. territory.

“We’re delivering food to all of the municipalities, and water,” he said. “There were complaints that that water in some places was not getting to the people so I ordered a full investigation.”

The distribution of supplies including food, water and fuel has been a major challenge for the struggling government after Maria wiped out its power grid, flooded roads and crippled the communications system.

Luis Menendez, a mail man for the U.S. Postal Service, delivers mail at an area affected by Hurricane Maria in the island of Vieques, Puerto Rico, October 7, 2017

Luis Menendez, a mail man for the U.S. Postal Service, delivers mail at an area affected by Hurricane Maria in the island of Vieques, Puerto Rico, October 7, 2017. Picture Taken October 7, 2017. REUTERS/Carlos Barria

“If there is a place, a locality that is not delivering food to the people of Puerto Rico that need it, there’s going to be some hell to pay,” Rossello said.

He said the government was trying to identify problems in the distribution pipeline, looking to ensure that local leaders deliver resources to the Puerto Rican people as soon as they arrives in the municipality.

“I think that there are places where water is being withheld and food is being withheld,” Rossello said. “We need to showcase it, we need to push it forward to the people.”

Three weeks after the storm hit, Puerto Rico still has a long road to recovery, having only 15 percent of electrical power restored and struggling to regain communication services. The White House has asked Congress for $29 billion in hurricane relief for Puerto Rico, Texas and Florida.

 

(Reporting by Doina Chiacu; Editing by Bill Trott)

 

Special Report: The bankrupt utility behind Puerto Rico’s power crisis

Special Report: The bankrupt utility behind Puerto Rico’s power crisis

By Nick Brown, Robin Respaut and Jessica Resnick-Ault

SALINAS, Puerto Rico/NEW YORK (Reuters) – In the rural village of Salinas in southern Puerto Rico, frayed electric lines hanging from a utility pole blew in the breeze last week near the town square.

But the damage didn’t come from Hurricane Maria.

“Those wires were actually there before,” said Fermin Seda, 68, a Salinas resident who said he has grown accustomed to downed lines and power outages.

Two weeks after the storm plunged the island into a blackout, less than 10 percent of Puerto Rico’s 3.4 million people have seen power restored – and many will wait months.

Restoring the grid after the worst storm to hit here in nine decades would be a monumental task even for a well-run utility. It will be much harder for the chronically underfunded Puerto Rico Electric Power Authority (PREPA), which went bankrupt in July amid mounting maintenance problems, years-long battles with creditors, a shrinking workforce and frequent management turnover.

For graphic on slow restoration of power after Maria click: http://fingfx.thomsonreuters.com/gfx/rngs/STORM-MARIA-POWER/010050ZK27Z/index.html

For graphic on PREPA’s aging power plants, dwindling workforce click: http://fingfx.thomsonreuters.com/gfx/rngs/USA-PUERTORICO-UTILITY/0100512E2EX/index.html

Interviews with more than two dozen officials and consultants who work for or with the U.S. territory’s government, PREPA or its creditors reveal a utility that was unprepared for a major storm despite the ever-present risk to this Caribbean island. When Maria hit, PREPA was trying to simultaneously finance an operational overhaul and dig out from about $8 billion in debt.

Puerto Rico Governor Ricardo Rossello, in an interview with Reuters on Saturday, said none of the utility’s storm response plans could account for years of poor maintenance of the dilapidated electric network.

“The emergency plan was as follows: There is no way to fix the nature of the grid,” Rossello said.

He added that the network was so feeble it would have collapsed even in a much weaker storm than the one that hit Puerto Rico at Category 4 wind strength – the second highest level in the five-tier U.S. storm gauge.

“If you have an old grid susceptible to collapse, there is no way – until you change it completely – that it can sustain the winds of a Category 4, or even really a Category 2,” the governor said.

CHRONIC WEAKNESSES

A host of chronic problems at PREPA left the island’s electric grid vulnerable to collapse in a major storm, Reuters found. They include:

* Frequent turnover in management and board leadership,which has long failed to prioritize grid maintenance, accordingto reports prepared in 2015 and 2016 for utility regulators bythe consultancy Synapse Energy Associates. The deferred upkeep,according to a PREPA assessment in April, led to a “degraded andunsafe” grid that needed at least $4 billion for modernizationof an “isolated system, in challenging terrain” that is “subjectto natural atmospheric events.” * Falling revenues that failed to cover operating expensesbecause of poor collection of utility bills and declining energysales through a decade-long recession. * A lack of regulatory oversight prior to 2014, and a roughtransition of power from former utility board members andofficials to a new energy commission created that year bylegislation, with little handoff of disaster-preparedness plans. * A staff diminished from 8,628 workers in 2012 to 6,042this year, according to the April PREPA report. The talent drainreflects a larger exodus of residents from Puerto Rico -especially skilled workers – as the U.S. territory lost 300,000people, or 8 percent of its populace, between 2010 and 2016,according to U.S. Census data.Ricardo Ramos, who took over as the utility’s chief executive in March, told Reuters that the number of employee departures over the past five years is actually closer to 4,000 – with the vast majority being key operational workers such as linemen, power plant operators and mechanics.

They were exactly the kind of workers the utility couldn’t afford to lose.

“PREPA did not invest in new power plants or new generation, so our power plants are very, very old; our distribution system is very, very old,” Ramos said in an interview on Monday.

One pivotal question now is whether the United States will work merely to patch the existing network or allocate billions of dollars in federal funds to overhaul it. The government is open to spending money on modernization, Homeland Security Advisor Tom Bossert said at a briefing last week.

The White House did not respond to Reuters’ inquiries seeking comment on the short- and long-term U.S. roles in restoring power to this U.S. territory.

FILE PHOTO: A woman chats with a neighbour at the Moradas Las Teresas Elderly House, where about two hundred elderly people live without electricity following damages caused by Hurricane Maria in Carolina, Puerto Rico, September 30, 2017. REUTERS/Carlos Barria/File Photo

FILE PHOTO: A woman chats with a neighbour at the Moradas Las Teresas Elderly House, where about two hundred elderly people live without electricity following damages caused by Hurricane Maria in Carolina, Puerto Rico, September 30, 2017. REUTERS/Carlos Barria/File Photo

‘THE LONG HAUL’

The Federal Emergency Management Agency (FEMA) told Reuters that the agency is “in this for the long haul” but offered no details on the level of funding it could commit to the island’s power grid.

Citizens of Puerto Rico do not receive services equal to U.S. states but also do not pay federal income tax.

The collapse of the grid isn’t the only cause of the island’s suffering. The U.S. relief effort so far has been unable to supply Puerto Rico with all the fuel it requires, for instance, leaving motorists waiting in long gasoline-station lines and depriving many backup electricity generators of diesel.

The lengthy electrical outages are a bitter pill for storm victims, who before Maria had already endured frequent service interruptions and rates higher than any U.S. state except Hawaii, according to PREPA and the U.S. Energy Department.

The impacts go well beyond temporary discomfort. The lack of power has been a key factor in a humanitarian crisis as residents with no refrigeration for food and medicine scrambled to find open stores and waited in endless lines.

In Salinas, 54-year-old Maria Sanchez wept as she threw out all of the food inside her mother’s fridge. By Saturday, she and six family members were surviving on crackers after eating all the other non-perishable food in the house.

“We are not rich – to throw away food like that. We’re running out of food – like fast,” she said, sitting on the porch, where a mild sea breeze offered little reprieve from the oppressive heat.

Diabetic Nancy Rivera lost more than food.

“All of my insulin is ruined,” said Rivera, 59, of Santurce, a district in San Juan, who stopped taking her spoiled medicine four days after the storm.

‘TRIAGE’ OF GRID REPAIRS

Winds of up to 155 mph (250 km/hr) during Maria knocked out about 80 percent of PREPA’s distribution network, said Ramos, the utility’s chief executive. Since the storm, power has been limited to key locales such as hospitals and hotels using generators fueled with a scarce supply of diesel.

Damage assessment for the grid, usually completed within 48 hours of a hurricane in the mainland United States, took a week-and-a-half, Ramos said. The assessment went as fast as possible given the widespread damage, he said, and the utility had three working helicopters to survey the network.

FEMA last week put the U.S. Army Corps of Engineers – often tasked with infrastructure projects – in charge of short-term power restoration, in coordination with the Energy Department, the American Public Power Association and the New York Power Authority.

Gil Quiniones, CEO of NYPA, said the Army Corps had asked his utility for experts in power systems – which isn’t a Corps specialty – who can “think strategically on how to triage the situation and how to prioritize the work.”

The task is made more daunting by the island’s ill-maintained infrastructure. And PREPA’s strapped finances mean it cannot keep large standing orders for full-scale repair operations to swarm in after disasters, as utility repairman did last month in Florida after Hurricane Irma.

Ramos said PREPA has about 30 days worth of existing supplies for repairs following a storm; more is being ordered, to arrive in the next few weeks, he said.

‘THEY CAN’T TELL ME HOW LONG’

On the south side of Puerto Rico, near most of the island’s power plants, broken wires and blackouts were common before Maria.

“They tell me that right now, they’re evaluating damage to the power grid in our region,” Salinas Mayor Karilyn Bonilla said on Friday. “And they can’t tell me how long that will take.”

Bonilla said she has seen workers remove a few transformers since Maria hit but no one fixing downed power lines.

The amount of time power plants were down due to unplanned outages, measured in megawatt hours, more than doubled between mid-2015 and mid-2016, according to Synapse, the consultant firm.

By summer 2016, residents were experiencing four to five times the number of outages as the average U.S. customer, the consultants wrote.

The system’s deficiencies were laid bare in September 2016, when a transformer fire knocked out half of the island’s power, which wasn’t fully restored for nearly a week, forcing the governor to declare a state of emergency.

“Basically it was what you can call an unfortunate set of events, but really it is what I have said since I began at PREPA: lack of maintenance,” Ramos said.

One of the biggest factors in the outages: a constantly shrinking staff, driven away by costly medical benefits and unsafe conditions. The utility’s April report notes PREPA had a greater-than-average number of safety incidents for U.S. utilities, with more than 14,000 accidents and 15 fatalities in a 10-year period.

Many workers left for better opportunities, Ramos said. Because Puerto Ricans are American citizens, they face no legal barriers in leaving the island for the mainland.

“The truth of the matter is they make a lot more money in the U.S.,” said Ramos.

FIGHT FOR CONTROL

U.S. utilities are regulated by the states in which they operate, and by the U.S. Federal Energy Regulatory Commission if they operate across state lines. U.S. federal oversight of PREPA is limited to environmental and safety standards and does not cover the transmission network.

Unlike utilities in U.S. states, PREPA had no regulator for decades and essentially governed itself. In 2014, the Puerto Rico Energy Commission was created by the island’s legislature, which sought greater oversight in response to perceived neglect by PREPA’s leadership at the time, which resisted the intervention.

Weeks after the act passed, PREPA became insolvent.

Today, the political squabbling over control of PREPA – and blame for its problems – continues even as utility officials respond to a historic crisis.

Ramon Luis Nieves – former head of Puerto Rico’s senate energy committee and a champion of the 2014 legislation – blasted former utility officials for poor oversight in an interview last week.

“Using their powers of self-regulation, PREPA itself was judge and jury,” he said as he waited in a five-hour gasoline line.

Energy Commissioner Angel Rivera said former PREPA officials gave the new regulator nothing in the way of disaster plans.

“If PREPA did any sort of analysis like this when they were creating the system, we would not know,” said Rivera, who was appointed in November 2014.

PREPA also fought the commission’s requirements to integrate renewable energy, said Nieves, the former senator. The commission rejected the utility’s first long-term plan to create a more reliable, cost-effective grid as inadequate, according to commission records.

Attempts by Reuters to reach PREPA’s previous chief executive, Javier Quintana, were unsuccessful.

Ramos – Quintana’s successor and a former engineer and PREPA employee – said he agreed with the need for an oversight commission when it was formed. But he now believes the commission wields too much power, citing its pushback on the utility’s capital spending.

“I basically have no power,” he said. “Basically, they wanted to run PREPA except during a hurricane, because now they are nowhere to be found.”

Jose Roman, interim chairman of the energy commission, disputed the notion that the commission wanted to run the utility, saying it only aimed to protect customers.

YEARS OF REBUILDING AHEAD

What remains unclear is the level of commitment from FEMA, the Army Corps and U.S. utilities for longer-term upgrades to buttress the system against future storms.

Bossert, the U.S. Homeland security advisor, said on Sept. 28 that the power grid would have to be rebuilt, “so we’re going to put federal money into this.”

The costs will be steep: The $4 billion estimate for modernization from PREPA does not include additional damage from Maria.

The task will be complicated by PREPA’s battles with creditors, who are led by hedge funds and mutual funds. The parties had been in debt restructuring talks for three years before the agency filed for bankruptcy in July.

A group of PREPA’s largest creditors, which include Franklin Advisers, Oppenheimer Funds and BlueMountain Capital, offered a loan of $1 billion after the hurricane. The island’s fiscal oversight committee rejected the offer, calling it a “publicity stunt” and criticizing the repayment and interest terms as unfavorable.

A spokesperson for the creditors declined to comment on that statement but the investment firms’ advisor, investment bank Houlihan Lokey, earlier expressed disappointment that the proposed loan had been rejected without negotiation.

The utility had considered but not yet implemented a wide variety of infrastructure improvements when senior leadership turned over after Rossello became governor at the beginning of the year. The governor typically appoints PREPA’s board and executive director.

Now new honchos are starting over in assessing PREPA’s needs, a repeat of past leadership transitions.

In the summer of 2016, PREPA held its 2017 public budgeting proceeding – the first led by the island’s utility commission rather than the utility itself.

Amid the deep financial problems of the island’s government and the utility, the commission allocated about $400 million for PREPA to address maintenance and repairs for the year, Commissioner Rivera said. Overall capital improvement plans for 20 years come to $2 billion, according to commission consultant Synapse.

Even the long-term plan represents just a fraction of what will be needed, suggesting the grid overhaul will require a serious commitment from the United States. Discussions about that reality are starting now.

“There’s diverging sentiments on the role of U.S. funding,” said a private sector energy executive who is working with PREPA to fix the networks and has been involved in strategy discussions with officials from FEMA and Puerto Rico.

“That’s where things start to get stuck,” he said. “No one argues about a generator in a hospital, but that doesn’t get the lights in the houses turned back on. Nobody knows where the money is going to come from.”

(Reporting By Nick Brown and Robin Respaut in San Juan and Salinas, Puerto Rico, and Jessica Resnick-Ault in New York; Additional reporting by Scott DiSavino and Stephanie Kelly in New York and Roberta Rampton in Washington; Writing by David Gaffen and Jessica Resnick-Ault; Editing by Brian Thevenot)