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WAPA Board Applauds Decrease in Levelized Energy Adjustment Clause

(Friday, December 19, 2014)


In the Governing Board’s monthly meeting held on Thursday, December 18, 2014, WAPA board members expressed their excitement that the Authority was able to offer relief to customers by reducing the levelized energy adjustment clause (LEAC) beginning January 1, 2015. The Authority went before the Public Services Commission (PSC) on Dec. 16, requesting a reduction in the LEAC for the first six months of 2015. The reduction brings the new rate per kilowatt hour for residential customers to 39.19 cents per kWh, down from the current rate of 48.6 cents per kilowatt hour. The lower charge is due, in large part, to WAPA’s ongoing propane conversion project, which will begin utilizing the more affordable fuel in the first quarter of 2015, as well as the reduction worldwide in fuel oil prices. “We’re delighted at the relief we are able to bring ratepayers,” said board chairman Attorney Gerald Groner, recognizing the milestone the Authority made with the approval, by the PSC, of the rate reduction.

In board action, the members approved a contract in the amount of $324,350 with Open Systems International for an Automatic Generation Control (AGC) project. AGC is a system for adjusting the power output of multiple generators in response to changes in the load. The system has the capability of determining the on/off schedule of WAPA’s energy resources to provide optimal and efficient service while minimizing cost. Benefits of the AGC system include a reduction in total production costs and protecting the integrity of power grid, which is a huge concern when integrating differing power generating sources, particularly intermittent sources, into the grid.

The board also approved time extensions for two projects: the Christiansted Underground Decorative Streetlight Project and the MAXIMO Implementation Project. The Christiansted project experienced delays because construction in the historic town of Christiansted proved to be challenging. Crews experienced shallow existing utilities in the roadway, work stoppage due to rain, and changes to the scope of work for existing drainage, guts and culverts that run along the sidewalk. The time extension, at no additional cost, allows for needed placement, construction and installation of concrete street light bases with the least impact.

The extension for the MAXIMO project, also at no additional cost to the original contract, allows contractor Total Resource Management to proceed with Phase II of the project, which incorporates the interface design of the system into SunGard system, via Maximo, which would allow access to warehouse inventory, labor rates and purchasing modules. Design of the interface is the key to maximizing the Authority’s maintenance tools within the Maximo software and increasing the maintenance department’s efficiency as it relates to carrying out all maintenance related tasks.

Other measures approved by the Board:
• A contract with ESI-Energy, Inc. in the amount of $929,931 for Phase I of a fire protection system upgrade to introduce liquefied petroleum gas (LPG) into the power plants and commissioning the gas generating units on LPG. A contingency was approved in the amount of $375,000, in the event of additional work due to the dynamics of the project and work related to hazardous area classification changes that will be required once the hazardous areas are confirmed.

• A project which will allow Seven Seas to install calcium carbonate and carbon dioxide injection equipment at both Randolph Harley and Richmond Plants to mitigate the colored water in the Authority’s distribution system. Funding for the project will be through the water LEAC during the last 10 years of the Authority’s water purchase agreement with Seven Seas at $0.15 per/1000 gallons.

In his Executive Director’s Report, WAPA’s CEO Hugo V. Hodge Jr., updated the board on the issues before the Authority this past week, to include the PSC Meeting, as well as the testimony he offered before the 30th Legislature on both the Tibbar lease agreement and Bill 30-0521-the ratifying agreement between Hovensa and ABR. Through a Power Purchase Agreement (PPA) with Tibbar Energy USVI, LLC, for a biomass energy project on St. Croix, WAPA will receive 7 megawatts of base load power generated from Giant King Grass through an anaerobic digestion process.

Mr. Hodge’s comments to the Senate on the Hovensa/ABR agreement were, “With regard to how it will impact the Authority if the Agreement is not approved, please note that the Authority relies on Hovensa for gasoline and for Ultra Low Sulfur Diesel (ULSD) road diesel for our large vehicles on St. Croix. Additionally, and most importantly, we rely on Hovensa for storage of High Sulfur Diesel (HSD) No. 2 fuel oil for our power generating facilities in both Districts as our current fuel supplier, VITOL, stores the fuel it sells to the Authority with Hovensa.”

Board members in attendance were Chairman Atty. Gerald Groner, Vice Chair Juanita R. Young, Secretary Noel Loftus, Planning Committee Chair VIEO Director Karl Knight, Licensing and Consumer Affairs Commissioner Wayne Biggs and Elizabeth Armstrong. Board members Cheryl Boynes-Jackson and Donald Francois were excused.