Press Releases

Default text size Larger text size Even larger text size   print
RSS feed
< Back to Main

WAPA BOARD APPROVES TEN YEAR FINANCIAL FORECAST

(Thursday, February 28, 2013)

WAPA BOARD APPROVES TEN YEAR FINANCIAL FORECAST REQUIREMENT FOR RUS LOAN
TO MODERNIZE METERING INFRASTRUCTURE

Stating that “we have been forward thinking” in reference to the Virgn Islands Water and Power Authority’s underground projects to increase service reliability and aesthetics in downtown St. Croix and St. Thomas, Chairman. Gerald Groner, Esq., presided over the Governing Board’s monthly meeting today at which other state-of-the art project solutions were approved. Board members also discussed power plant efficiencies, the use of propane gas for base generation and the recent Washington, D.C. meeting with federal and local officials called by Delegate to Congress Donna Christiansen to seek assistance to cope with the high rates paid by the utility’s customers.

As an essential component of moving forward with technology and service improvements to benefit customers, the Board voted out of executive session the approval of a 10-year financial forecast confirming the Authority’s credit-worthiness. The forecast is a requirement by Rural Utility Services (RUS) as part of a loan request for the advanced metering infrastructure project (AMI) that has been in the development process for two years. AMI will implement meter reading from the office, reduce meter tampering, quickly identify faults in the system, and lay the communications ground work for a smart grid to allow customers to control costs by monitoring real time energy usage in their homes and businesses. The Board also authorized the Authority to borrow $15 million to complete the project with a guaranteed RUS loan at a 3-4% rate of interest. The loan period will be for 20 years and will incur a net present value savings of $30 million for customers.
During the meeting, Chairman Groner focused discussion on clarifying the term “heat rate” which is how thermal efficiency is measured in a power plant when converting fuel oil into electricity. Recent reports have questioned the Authority’s record of operational efficiency. Executive Director Hugo V. Hodge, Jr. said that while the utility is constantly working to improve the numbers, the heat rate which is currently in the range of 13,000 british thermal units (BTUs) improved tremendously over the last several years from as high as 17,000 BTU’s in both plants.
Groner explained the challenges of operating with the existing generators and then “being compared to some imperfect and impossible standard,” of new generators running at peak load. “Our efficiencies are often compared to new units running at full load, we don’t run at full load,” he said. Groner drew an analogy to a new vehicle’s stated mileage in the city and on the highway. A new car often has a lower gas mileage per gallon expectation for city driving because of the stop and go traffic, he said. Depending on customer demand, the power plant turbines don’t always run at peak load and the ramping up and down, similar to a car’s stop and go, will create operational inefficiencies.
Hodge added that the combustion process is inefficient in itself. The highest current industry efficiencies most often occur from a combination of liquefied natural gas as a fuel source running in combined cycle with heat recovery steam generators. John Woodson, St. Thomas assistant plant superintendent added that 75% of power in a turbine is used to power the turbine and 25% is used for actual output. Hodge further explained that the Authority also produces water through a thermal process requiring the use of fuel oil which affects efficiency. Heat rates will continue to improve when the utility totally converts to water production using reverse osmosis, he said. The conversion will be completed by the end of the year and savings will be immediately passed through to customers, said Hodge.
Hodge reported that his technical, financial and legal teams are steadily making progress towards the acquisition of liquefied petroleum gas (propane) after completing the first round of talks with companies shortlisted after responding to the utility’s recent Request for Proposals for propane and liquefied natural gas (LNG) providers. The shortlisted companies will be required to firm up their proposals by early April and the Authority anticipates signing contracts by early May with a propane provider and by mid-summer with an LNG provider. Hodge said that the propane option will bring at least a 30% reduction in customers’ bills by the second quarter of 2014. The Authority will also be converting to a tri-fuel system of generating, being able to use propane, liquefied natural gas or diesel based on what is most cost effective on the market at time of purchase.
In his executive director’s report, Hodge said that during Monday’s meeting in Washington, also attended by the Governor, V.I. Senate President and the VI Energy Director, federal officials were able to get a “good feel for what we’re faced with” in the territory. He said they understood that while WAPA will be able to bring relief in 18 months through the LPG projects, the 18MW solar energy project, improved efficiencies, and other initiatives, the Virgin Islands is searching for short term assistance. Hodge also asked for expediency in pending matters such as the loan application submitted to the Rural Utility Service (RUS), for the advanced metering infrastructure project.
“We are working on bringing the real tangible solutions,” said Hodge. ‘We don’t like to hear or feel the stress in our community. We know it’s a reality here and in the region and although it’s not a real comfort to our customers to hear about the other islands, we are not going through this alone,” he said. “We have to keep hope in the community.” Hodge said.
The Governing Board took the following actions:
• Approved a time extension of 90 days to Fortress Electric at no cost increase to work on the transmission line from St. Croix’s Richmond Substation to the planned Midland Substation
• Approved change order #3 to award $2,859 to Zenon Construction to install erosion mats. The monies are the remaining grant funds from the EPA’s Drinking Water Infrastructure Safety Act funded project to rehabilitate St. Croix’s Richmond Tank.
• Approved an extension to a contract with Fortress Electric to June 29, 2013, at no additional cost, for the installation and termination of underground materials and equipment for St. Thomas’ Main Street Hazard Mitigation Project and a dedicated Feeder #6B out of the Donald C. Francois Substation at Long Bay. A three month project extension was granted by FEMA after a request to delay the project for a year was rejected.
• Approved an extension for Island Roads to June 29, 2013 at no additional cost for the construction and installation of electrical duct banks, manholes, pad mount switchgear and transformer pad foundations for the Main Street Hazard Mitigation Project on St. Thomas
• Approved an amended work scope for Phase 1 of the Midland Substation Project in the amount of $3,778,910 to add the purchase of two 69/25kV power transformers and 25kV switchgear. The total project cost will be $6,534,447 funded through the Authority’s 2010 bond issue, and line loss funds collected through customer billings. The project is needed for the design construction and installation of a transmission system on St. Croix which will assist in the interconnection for Toshiba Corporation’s solar project and Tibbar Energy’s anaerobic digester project.
• Approved a contract extension for Ambient Technologies, LTD from March 8 to December 31 2013, for services on St. Croix, and to June 30, 2013 on St. Thomas at a cost not to exceed $1.02 per kgal. The extension will ensure that water production needs are satisfied during the interim period preceding the completed installation of the new reverse osmosis facilities on both islands
• Approved a one year lease for the rental of a condominium unit to accommodate senior management staff who must travel weekly to attend to business on St. Croix. The lease of a unit is highly cost effective compared to nightly hotel rates throughout the year.
• Approved a one year lease extension with the Virgin Islands Telephone Corporation commencing May 2013, for the rental of office space at No. 1 Beltjen Place for WAPA customer services offices at a lease amount of $15,450 monthly plus operating expenses not to exceed $3,000 monthly.
• Approved a one year lease with Sam’s Management, Inc., St. Thomas for the rental of office space commencing March 2013 at Altona in the amount of $8,4000 monthly
• Approved an addendum to a contract with ABC concepts Inc. for Emergency and Supplemental Maintenance services for the Randolph E. Harley Power Plant in the amount of $259,108, increasing the total contract to $459,108. Additional costs were incurred as a result of necessary but unbudgeted projects on the major generating equipment.
• Authorized the Executive Director to increase the contract amount by $20,000 to compensate Bryan’s Electrical Contracting Corporation for additional work requested by the Department of Public Works Market Square Project that will take 220 calendar days to complete. The original contract sum was $341,900.

In the WAPA Working for You segment during which employees are invited to present to the Board about their job duties while observing the Board in action, Dwight Nicholson explained the responsibilities of a Results Engineer. Nicholson who holds degrees in nuclear engineering and in process technology collects the data used for calculation of fuel inventory and related costs. The data is important in assessing power plant and water operation performance and forecasting the customers’ fuel surcharge. He collects and reviews data for the EPA, monitors emissions, maintains the supply of safety equipment for plant operators and supplies for the chemistry laboratory. He has modernized record keeping and data collection in the St. Croix plant and helped to implement real time plant performance systems used by operations personnel. One of the programs Nicholson was instrumental in developing charts the generation fuel costs each hour in real time. He says that the information also serves as a reminder to control room operators to efficiently manage fuel use “because when the price for fuel use in the plant goes up, so will their bills at home” Nicholson said. Nicholson, who also serves as a tour guide for visitors from schools and other organizations, said his goals include the addition of a weather station to accurately monitor effects of plant performance based on different ambient conditions and to provide real-time plant power generation to be attached to WAPA’s website so the general population can see, for example, how much power is being generated.
Attending today’s meeting, were Groner, Board Secretary Noel Loftus, DPNR Commissioner Alicia Barnes, DCLA Commissioner Wayne Biggs, and Donald François. Excused were Vice Chair Juanita R. Young, Cheryl Boynes Jackson, VIEO Director Karl Knight and Brenda Benjamin.
###