Nikolao I. Pula
Acting deputy Assistant Secretary of the Interior for Insular Affairs
House Sub-committee on Insular Affairs
House Subcommittee on Energy and mineral resources
Charting a Clean Energy Future for the Insular Areas
Frederikstead, St. Croix, United States Virgin Islands
April 12, 2008
Co-chairs and members of the Subcommittees on Insular Affairs and Energy and Mineral Resources, thank you for the opportunity to testify on Charting a Clean Energy Future for the Insular Areas. The Insular Areas include the United States territories of the United States Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands (CNMI); and the freely associated states of the Republic of the Marshall Islands, the Federated States of Micronesia (FSM), and the Republic of Palau.
In island communities, we see very little air pollution. The wind blows it away. What does not blow away is the escalating cost of fossil fuels. Most people in the islands would like to utilize clean energy. When faced with the need to purchase large-scale electric capacity, officials in the islands, however, have found it more economic to continue to rely on oil based fuel. Not any more. The high cost of oil means that alternative sources of energy are increasingly attractive from an economic point of view.
High energy prices are currently the greatest threat to all of the economies of the United States and affiliated insular areas. The high cost of electricity depletes the wallets of island residents and the finances of local governments and businesses. In those islands where the cost of electricity is subsidized by the local government, we are approaching a crisis. Increasingly substantial portions of the local government budgets are being siphoned off for fuel to run their electric power plants. In the CNMI, for example, where the annual budget is approximately $160 million, $80 million is spent on fuel for its power plants.
The rising price of oil has made alternative sources of power more economic. It has also highlighted the long-standing need for existing equipment to give us its best performance and efficiency.
Pursuant to the Energy Policy Act of 2005, the Department of the Interior published the United States of America Insular Areas Energy Assessment Report in 2006. Copies of the report were made available to the Congress. The report analyzes the energy situation in each United States territory and freely associated states, in detail. The report deals with both the supply and the demand sides of the energy equation.
On the supply side, some alternative technologies already have been proven to be commercially viable; others may be available in the future.
Besides the potential for alternatives to oil, a second avenue for energy improvement is a focus on the management and maintenance practices for existing electric generation facilities. Most of the insular areas have paid considerable attention to these issues in recent years.
Potential efficiencies could be gained by (1) improving operations and maintenance operations standards, (2) improving load balancing and distribution on the existing grids, and (3) replacing transformers and other distribution systems with more efficient models. The CNMI, for example, is in the midst of an overhaul of most of its generating base. When the overhaul is complete, CNMI officials estimate that they will save over $2 million a month in fuel and lubrication costs.
The 2006 report identified a range of steps that can be taken by the insular areas to reduce overall consumption and create long-term savings for utility customers. These suggested steps include:
Outreach and education will be critical. Some may balk at the up-front costs associated with adopting alternative energy solutions, even if the longer-term savings far outweigh the up-front costs. We encourage the insular governments and utilities to explore new concepts that may alter energy consumption. For instance, local retailers and wholesalers could arrange bulk purchases of proven alternative systems with financing and repay loans through the utilities' billing processes.
INTERIOR SUPPORT FOR ENERGY INNOVATION
The Department of the Interior has long supported electricity producers in the islands in their efforts to build the capacity and improve the efficiencies that lead to lower costs and lower emissions for delivered electricity.
The Energy Assessment Report contains valuable data and ideas for addressing the energy challenges that we are currently experiencing. A sustained effort is now required to ensure that the options outlined in the study are more fully reviewed and the residents of the insular areas receive any potential benefit as quickly as possible.
In order to stretch the island energy dollar as far as possible, officials from the Office of Insular Affairs will visit each of the United States territories and freely associated states to discuss ways to implement the most promising energy options outlined in the Energy Assessment Report.
On Thursday, Secretary Kempthorne's Deputy Chief of Staff, Doug Domenech, and I met with Governor John P. de Jongh, Jr., in St. Thomas to present him with a $50,000 grant from the Office of Insular Affairs to aid investigation of realistic energy measures that will benefit the residents of the Virgin Islands. The grant was made in response to a request from the Governor. Our Interior team then met with other local government officials to discuss the Insular Areas Energy Assessment Report and promising technology. The Government of the Virgin Islands is to be praised for moving aggressively on the energy issue. Because of the initiative shown by the Governor and his staff, we look forward to a good working relationship as we seek out practical energy solutions.
At the end of this month, staff and I fly to the CNMI to discuss the CNMI portion of the report. OIA officials will later visit Guam, American Samoa, and the freely associated states.
We believe that effort expended in the energy area can bring significant economic pay off in the form of lower utility costs for residents and businesses, and may possibly pave the way for new industry in some of the islands.
We appreciate the leadership the co-chairs have shown on this critical issue of energy. Thank you for your effort and your support. I would be happy to answer any questions you may have for me.