Southern Energy Inc. has reportedly upped the ante for a controlling share of the V.I. Water and Power Authority.
WVWI Radio One reported Friday morning that Southern has made a new offer of $105 million to the government for its share of the electrical and water generating plants currently owned by WAPA. The initial offer was estimated to be around $76 million.
Negotiations are reportedly continuing between the government and Southern over the finer points of the agreement, which the governor and Legislature must approve.
Along with increasing the dollar amount of the offer, Southern reportedly is also willing to liquidate WAPA's bond indebtedness, estimated at around $150 million. Southern has also offered to write off up to $24 million of the government’s debt to WAPA.
The remaining $9 million government debt would be used to wipe out a line of credit the government holds against WAPA dating back to the 1980s when WAPA bought two desalination plants using money loaned by the government.
Radio One said the government and Southern are debating whether the joint venture, if approved, should be named V.I. Power. Sources told the station that in addition to the capital outlay, Southern has agreed that any income generated by leasing utility pole space to the V.I. Telephone Corp. and Cable TV be deposited into the government’s coffers.
Twenty percent of the profits generated by the joint venture would be paid annually to the government as dividends, according to the latest version of the proposed agreement.
WAPA's unionized employees would not see any significant changes if the sale goes forward. Retirement benefits, seniority and health insurance are all expected to be transferred intact if the deal goes through.
There will be some managerial changes, however. Thirteen of the current 60 management employees reportedly will be let go.
One top employee the joint venture does not want to retain is Executive Director Raymond L. George. However, George reportedly will be offered a consultant’s contract.
The joint venture would own the generating portion of both the electrical and water producing systems but the government would retain ownership of the distribution system, the poles and power lines that extend out from the power plant.
The distribution system would then be leased back to Southern by the V.I. government.
The government’s ownership of the utility poles, transformers and power lines means the company could still apply for Federal Emergency Management Agency assistance in the event of a catastrophic natural disaster.
With talks expected to continue over the next two weeks as both sides hammer out the finer points of the proposed agreement, Gov. Charles Turnbull is expected to submit the WAPA sale legislation to the Senate by mid-February, Radio One reported.
