The privatization of the V.I. Water and Power Authority will likely be the main point in a Senate Committee on Government Operations meeting Tuesday.
Following a July 23 meeting for which many WAPA officials and board members failed to show up, Sen. Gregory Bennerson, chair of the committee, subpoenaed them for Tuesday’s session, said his press officer, Richard Nicks. Those supposed to attend the meeting, billed ostensibly as a chance to discuss the status of the utility, were WAPA Executive Director Raymond George, Assistant Executive Director Gregory Willocks and the utility’s governing board.
Soon after WAPA experienced an island-wide power outage on St. Croix earlier this month, the governing board approved a request by Gov. Charles Turnbull that Southern Energy be awarded a 60-day due diligence period that normally precedes a sale agreement. Along with the company’s operations in the U.S. and Europe, Southern Energy operates utilities in Trinidad and the Bahamas.
Former Gov. Roy Schneider twice floated attempts to sell WAPA to Southern Energy for approximately $30 million to $40 million. The attempts were more an attempt to increase revenues and to balance his budgets than to shore up a utility beset by outages and debt.
The V.I. government alone owes WAPA $33 million said Sen. Anne Golden, a vocal proponent of privatizing the utility.
Unlike the Schneider administration, Golden said, a sale shouldn’t be based on the government collecting increased revenue. Rather, she said, it should be done to improve service and the territory’s ability to lure investment.
"It’s about the survival of the fittest and a free market. The more government controlled WAPA is, the worse it gets," Golden said, adding that opponents of the idea were afraid of losing control. "Nobody wants to come here with a utility that’s falling apart."
The fear of off-island ownership, though, is stunting chances for quality service and investment in the territory, she said.
"A partnership with a private firm to improve the quality of service should be the factor" when contemplating a sale, Golden said. "It’s not going to get any worse than it is now."
Meanwhile, as the due diligence period with Southern Energy continues, the WAPA governing board has put off approval of purchasing a 23-megawatt gas turbine. The unit is needed to satisfy St. Thomas’ peak load, which is being hit now.
Because of the peak load situation, Sen. Lorraine Berry said last weekend on her radio show, an agreement between Southern Energy and WAPA for additional generating power wouldn’t come as a surprise.
Many hurdles remain in any potential sale of WAPA, including union employment questions and if retiring the utility’s large debt load would affect rates.
WAPA now carries approximately $200 million in outstanding tax exempt bonds. A potential buyer would have to refund the bonds after taking ownership, which translates to additional $4-million-a-year payments.
The Government Operations Committee hearing is set for 10 a.m. Tuesday in the Legislature's chambers in Frederiksted.
