U.S. VIRGIN ISLANDS – The Virgin Islands Water and Power Authority (“WAPA” or “Authority”) Governing Board today, Friday, December 23, 2022, approved the temporary authorization to purchase spot-market, or short-term propane supply through March 31, 2023.
The approval for spot purchases of propane is key as it will allow the Authority relief from 100% diesel utilization, which is how the Authority has been operating since propane deliveries were suspended at the end of November 2022. Diesel’s market price is currently twice as expensive than propane and the Authority’s generators that utilize the fuel are less efficient and less reliable than its propane alternatives. Further, operating with only one fuel source reduces plant/generation redundancy and makes the loss of electricity and power rotations more challenging to mitigate as was seen earlier this week in St. Thomas that prompted a brief outage rotation schedule.
The Governing Board’s recent approval will grant the Authority authorization to purchase spot market propane at a cost not to exceed the equivalent of $500,000 per day. For context, the Authority under its previous contract, averaged $350,000 to $400,000 per day for propane. The authorized amount will allow for flexibility in the event market prices increase or transportation costs fluctuate. Additionally, while the Authority has historically paid for propane daily, spot market supply may require the Authority to pay for an entire delivery at once.
With access to the propane supply, St. Croix’s Estate Richmond Plant can operate entirely on the lower cost fuel source. St. Thomas’ Randolph Harley Power Plant will operate on a hybrid configuration that utilizes both diesel and propane. Available inventory of propane will see dramatic cost savings for both facilities and improve reliability from a generation standpoint.