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WAPA in Final Negotiations for Alternative and Renewable Electric Energy

(Friday, January 09, 2009)

Hugo Hodge Jr., CPQ, Executive Director of the Virgin Islands Water and Power Authority, has announced that WAPA is in final negotiations with companies that submitted proposals in response to WAPA’s Request for Proposal to Provide Electric Energy to the Virgin Islands Water and Power Authority.

In June 2008, WAPA entered into final review and discussions of a selected list of proposals that had the greatest potential to reduce electricity costs through non-oil electricity generation facilities in St. Thomas and St. Croix and the potential to decrease WAPA’s dependence on oil and its erratic prices. Since that time, WAPA has substantially concluded both its technical review of the proposals, and detailed negotiations of Power Purchase Agreements (PPA) and Interconnection Agreements with selected finalists. WAPA anticipates entering into definitive agreements in the next three months for the purchase of energy with one or more of the proposed projects that can provide a guaranteed monthly supply of energy at a cost that is lower than WAPA’s projected energy costs.

WAPA had originally anticipated concluding these agreements by the end of 2008. However, the process of concluding these negotiations has been delayed due to the disruptions in the credit markets, instability in the oil markets, and the necessity for the finalists to negotiate and enter into agreements with third parties to support their proposed projects. WAPA's negotiations with the finalists for the purchase of power have been on-going and are significantly advanced. The technologies proposed by the finalists are waste-to-energy, coal, geothermal, and ocean thermal energy conversion (OTEC) The proposal for a combined wind and solar facility has been withdrawn due to the proponent’s difficulty in obtaining financing.

Hodge said that the proposals selected for final negotiations offer the best prospects to diversify WAPA's fuel mix and to mitigate the potential impact of future increases in oil prices. Hodge assured the utility’s customers that WAPA is diligently working to complete the process, and is quite optimistic about the diversification of WAPA’s energy portfolio. However, due to the confidential nature of the on-going commercial negotiations, WAPA is unable to provide details of the negotiations with each project but will immediately announce the results as soon as negotiations are concluded, Hodge said.

The RFP process is just one of the ways WAPA is seeking to minimize the impact of erratic fuel oil prices on WAPA’s customers. WAPA continues to work closely with Governor John P DeJongh, Jr. to develop additional energy strategies and solutions in order to achieve lower electricity costs for Virgin Islanders, Hodge said.