Speaking before the Senate Committee on Homeland Security and Governmental Affairs today in Washington, D.C., Southern Company President and CEO David Ratcliffe offered insight on the company's successful response to Hurricane Katrina, stating that, "At a high level, our success can be attributed to extensive pre-planning, excellent execution of a well-defined plan and significant help."
Today's committee hearing is part of an ongoing investigation into the government's preparation for and response to Hurricane Katrina, which devastated Mississippi and Louisiana coastal areas last August. The hearing, titled, "Hurricane Katrina: What can government learn from the private sector's response?" examined why various private sector response efforts were successful and whether procedures could be adopted at agencies across all levels of government.
"I could not be more proud of this unprecedented response by our employees," Ratcliffe told the Committee.
Hurricane Katrina was the worst natural disaster in the history of Southern Company's Mississippi Power subsidiary, and one of the biggest operational challenges Southern Company has faced in its more than 80 years of existence. The storm wreaked havoc on the lives of the 1,250 Mississippi Power employees and their communities, destroying homes and, in some cases, entire neighborhoods.
All 195,000 Mississippi Power customers were without power. Nearly two- thirds of the company's transmission and distribution system was damaged or destroyed, its second-largest electric generating plant was flooded, and Mississippi Power's headquarters building in Gulfport was damaged so severely it will not be fully operational until late next year.
Ratcliffe noted that Southern Company's efficient, coordinated response to Hurricane Katrina -- which saw power restored in just 12 days -- was possible in large part because of its "vertically integrated" structure. Vertically integrated utilities are defined as companies that perform all three functions of generating, transmitting and distributing electricity for their customers.
"The president of Mississippi Power made the ultimate decisions on how this effort would proceed," he said. "This company had catastrophic damage to its distribution, transmission and generation facilities. The establishment and operation of staging areas, the procurement of food, shelter, fuel and security, among other things were singly handled for all three functions. This allowed for optimum utilization of these scarce services and the seamless and efficient sharing of resources among these three functions."
Ratcliffe added that decisions were made throughout the restoration to coordinate and direct the response of distribution, transmission and generation so as to bring back all three functions in a way that resulted in faster response to critical customers and ultimately all customers. "Coordination at this level would be much more difficult if these functions were in different companies," he said. "We have the ability to have one company set priorities and make decisions on behalf of our customers and not a particular business function."
A thorough planning process was another key element to the company's successful response, Ratcliffe noted. "Our recovery plans provide for flexible and decentralized authority to make decisions as close as possible to the disaster," he said. "We start taking action two weeks before a potential disaster, and every day new decisions are made depending on the track and severity of the storm."
In the case of Katrina, well before it hit, the company activated its disaster plan with 20 storm directors implementing their clearly understood responsibilities. By the time Katrina struck, Mississippi Power had invested $7 million in securing equipment and logistical support.
Ratcliffe also told Committee members that the company had pre-positioned 2,400 out-of-state workers on the fringe of the storm area in Mississippi and in Alabama ready to move in where needed, with clear authority and accountability for the jobs assigned. "Through mutual assistance agreements with utilities across our nation," he added, "workers from other utilities and contracting companies joined hundreds of employees from throughout Southern Company, and within seven days after Katrina, 11,000 workers from 23 states and Canada were assisting Mississippi Power."
Communication is crucial in responding to disasters -- especially when having to communicate with thousands of additional workers, Ratcliffe continued.
"For most of the 12 days it took to restore service, the only viable communication we, or the coast of Mississippi, had was our own internal system -- SouthernLINC Wireless," Ratcliffe said. "This system has been built to the standards required for our electric business with considerable redundancy. While it also suffered catastrophic damage, within three days it was functioning at near pre-Katrina levels and with added capacity to accommodate the dramatic spike in demand."
Mississippi Power also installed its own microwave capability to 12 remote staging areas in order to transmit material inventory data into an automated procurement process. When communication circuits of another company were down, Southern Company's information technology group bypassed those circuits and restored critical communications.
Ratcliffe said he was also pleased with the cooperation among state and federal government agencies. "We received exceptional assistance from Mississippi Gov. Haley Barbour who had the foresight to call a joint meeting the day after the storm with the Federal Emergency Management Agency, Mississippi Emergency Management Agency, county EMAs and Mississippi Power to share plans and communicate actions."
Ratcliffe concluded his remarks by summarizing the fundamentals of Southern Company's successful storm restoration effort. "First, a strong culture of teamwork, trust, superior performance and commitment to our customers; second, pre-planning and practice based on the application of lessons learned; and last, but not least, the cooperation and hard work of our suppliers, customers and fellow utility workers throughout the nation and Canada."