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(Friday, September 30, 2011)




            The Virgin Islands Water and Power Authority Governing Board held an emergency meeting today to approve an increase of the $10 million working capital line of credit the utility has with Banco Popular and the extension of the $3 million fuel hedge line of credit with Banco Popular as well, until December 31, 2011. Joseph Boschulte, WAPA Chief Financial Officer said both lines of credit expired this summer. He said keeping the line active will allow both the utility and Banco Popular more time to finalize a longer term agreement and possibly better rates for both lines of credit.  “This extension will help the Authority better manage its cash flow situation by having more capacity as we deal with the fluctuations in fuel; namely our ability to pay HOVENSA on a timely basis,” said Boschulte. 

            Hugo V. Hodge Jr., WAPA Executive Director further explained to the board that the increase in the amount of the line of credit is necessary because when the current version was established, the price of oil was about $30 to $40 per barrel, so it was adequately sized for those demands. “Because the price is now almost three times the amount it was at that time, it’s important we increase the working capital limits to ensure we have the flexibility to work under the current conditions,” Hodge said.     

            Board Chair Juanita Young noted as a point of clarification that what was approved today is only for the time extension and not in regard to whatever final terms are worked out for the increase of the line. Hodge echoed her comment stating the extension will keep the same terms that were previously established.  “It’s just a time extension to allow for the rest of the work to take place,” Hodge said.

            Board Vice-Chair Atty. Gerald Groner said it’s important to note that all businesses need a line of credit because of the fluctuations in income.  “A line of credit is a normal tool for business because sometimes you get your money and sometimes you don’t,” Groner said. Chairperson Young also explained that the structure of the utility’s customer billing cycle makes it very clear as to why there is a necessity to have a line of credit. Young said, “Oil is bought from HOVENSA in month one to produce electricity. Customers are billed in month two. Customers then pay in month three, but the Authority must pay HOVENSA sometime between the end of month one and the end of month two.”

Attending were Young; Groner; Noel Loftus, Secretary; Donald Francois; Licensing and Consumer Affairs Commissioner Wayne Biggs; and Energy Office Director Karl Knight. Planning and Natural Resources Commissioner Alicia Barnes, Cheryl Boynes-Jackson, and Brenda Benjamin were absent.