The proposed privatization of the V.I. Water and Power Authority has revealed a possible rift in the Turnbull-James administration.
In his State of the Territory Address last week, Gov. Charles Turnbull expressed tentative support for the sale of WAPA to Southern Energy, Inc.
He said that if a sale can secure lower rates for customers, provide a greater return on the government’s investment and include protections for the utility’s existing workers, then he was "increasingly confident that a fair deal for both the government and Southern Energy can be struck…"
A day after Turnbull’s address, however, his second-in-command, Lt. Gov. Gerard Luz James II, expressed opposition to the sale, although he said the utility needs restructuring "from the management down." James said he and Turnbull ran on a platform "strictly opposed" to the sale of WAPA. Because of that position, he said, the voters should be the ones who decide the utility’s fate in a public referendum.
"While I understand the governor’s objectives in considering the possible partnership, I think the people of the Virgin Islands should have a say and this can only be accomplished through a referendum," James said.
Although the sale issue has revealed a slight fissure in the Turnbull-James team, it is far from the gaping chasm that existed throughout the administration of Gov. Roy Schneider and Lt. Gov. Kenneth Mapp. James said that even given his position on the WAPA sale, he and the governor work well together.
A referendum, he said, is a way for the issue to be decided without the two officials one-upping each other a la Schneider and Mapp.
"I’m hoping he (Turnbull) would see it that way," James said. "We are still where we were when we started."
Speculation in the territory is that the adminstration will sell a majority interest of WAPA to help fund the government’s bloated payroll until cost-cutting measures take effect later this year. While details of the Southern Energy deal have not been released, there are reports that the company would purchase 80 percent of the utility for between $80 million and more than $100 million.
Southern Energy, the nation’s largest supplier of electricity, is proposing that WAPA be reorganized into two separate companies.
The government company would own 20 percent of the utility, particularly the electrical system’s transmission and distribution equipment. Keeping those systems within government ownership would make them eligible for Federal Emergency Management Agency funding in the event of a natural disaster.
A new company, co-owned by Southern and the government, would own and operate 80 percent of the utility — primarily its electricity plants, water purification plants and water distribution system. Electricity would be provided through the government-owned distribution system, according to a lease agreement.
In his address Turnbull said he was not considering the sale simply to help bail out the government. Rather, he said, if restructuring can provide better and more reliable service at lower rates, then the goverment had an "obligation" to consider Southern Energy’s offer.
"Under the proposal being reviewed, the public and social interests would be secured not through government or bureaucratic ownership, but instead through government regulation of private activity pursuant to a reinvigorated Public Service Commission," Turnbull said.
Schneider twice floated attempts to sell part of WAPA, for approximately $30 million to $40 million. Those efforts, however, were aimed more at increasing revenues to balance his budgets than to improve the utility’s delivery of services.
James, meanwhile, conceded that the government’s financial situation makes the decision to sell the utility more difficult. But he said the governor had made it clear to him that at this point nothing regarding the possible sale is cast in stone.
"This will have some far-reaching impacts on our community," James said. "The governor hasn’t made any determination. He has assured me that he’ll look at it in an objective manner."
