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WAPA Board Approves a Myriad of Measures

(Thursday, March 01, 2012)

The Virgin Islands Water and Power Authority Governing Board met for its monthly meeting on St. Croix on Wednesday. In a decisive move to address the urgent generation problems on St. Thomas, the Board voted to ratify an executed agreement with Pratt & Whitney for the emergency leasing of a component, which will temporarily replace a portion of gas generator Unit #22, which is currently showing signs of failure at the Randolph Harley Power Plant on St. Thomas.

The Authority relies heavily on Unit #22, a 22-megawatt generator, to meet its daily demand in the St. Thomas/St. John district. Due to the generator’s impaired mechanical condition, the Authority sought a lease proposal from Pratt & Whitney in order to obtain a temporary identical replacement of the engine component while repairs are made to the original component. The component, which arrived last week, has been installed and the unit is now fully operational. The Authority will maintain the unit during the term of the lease, which is not to exceed 90 days at a cost of no more than $675,000.

“Despite the shortage of money and despite the shortage of payments, we seem to be getting ahead of the curve,” said Board Vice-Chair Atty. Gerald Groner. “If we’re lacking money, we lack the ability to do the necessary maintenance and repairs. Nevertheless, despite all that, WAPA is putting the priorities together to get ahead of the curve and to get to a state in the situation where it could be maintained in an orderly fashion,” he said.

Chief Financial Officer Joseph Boschulte presented a six-month financial analysis ending December 2011. Boschulte indicated that total operating expenses, excluding fuel and depreciation for the six months ending December, 2011 is $26,269,045 compared to $29,188,280 for the same period in 2010. The decrease is attributed in part to a decrease in administration and general expenses as well as a decrease in production expenses. Boschulte did note that there has been a decline in electric sales, which can be attributed to more conservative use by customers. He also indicated that while the impact of HOVENSA’s closure will affect WAPA’s ability to procure fuel oil, it will not impact on customer kilowatt sales because HOVENSA had been generating its own electricity.

The Board also approved a contract award to J. Benton Construction, LLC for the Christiansted Phase II Underground Electrical Installation, which will relocate critical overhead feeders underground. Project coordinator R. Arthur Burton explained that the underground system will go from along Strand Street, King Street and Company Street and will reduce line losses; mitigate against the impact of storms; increase service reliability; and improve power quality. This phase is slated to cost $1.99 million and is funded through a 75% matching hazard mitigation grant from FEMA. 

In other matters, the board took the following actions: 

  • Approved $1.3 million for parts and services to address expanded repairs to Unit #15 at the Randolph Harley plant on St. Thomas.
  • Authorized the Executive Director to obtain liability insurance coverage extension for March 1 through April 1, 2012 for a premium of $117,474, and to obtain the annual coverage from April 1, 2012 to April 1, 2013 for a premium of $1.6 million; both from Tunick Insurance.
  • Approved the resolution for the third extension of maturity date of the $10 million general obligation note, electric system working capital line of credit with Banco Popular (2008 series C Note) from December 31, 2011 to March 31, 2012.
  • Approved the resolution for the third extension of maturity date of the $3 million fuel hedge program line of credit with Banco Popular (2008 series A Note) from December 31, 2011 to March 31, 2012.
  • Approved the resolution for the extension of maturity date for payment of capital projects line of credit with Banco Popular (2008 series A note) from November 13, 2013 to February 28, 2014.
  • Approved the terms and conditions of a standby letter of credit with Banco Popular (2008 series A note), previously approved by the Board on February 15, 2012.

Attending the meeting were Board Chair Juanita Young, Groner, Board Secretary Noel Loftus, Licensing and Consumer Affairs Commissioner Wayne Biggs, Energy Office Director Karl Knight, Planning and Natural Resources Commissioner Alicia Barnes, Cheryl Boynes-Jackson and Donald Francois.  Brenda Benjamin was excused.