With a multimillion-dollar offer on the table aimed at "partnering" the government with a private company to run the Water and Power Authority, Gov. Charles Turnbull was pressed Tuesday night to explain his position that he would never sell the public utility.
Turnbull turned over the forum sponsored by the Democratic Committee of the V.I. at Mid-Lands Restaurant on the proposed deal to a government financial consultant, Southern Energy representatives and administration officials. That prompted community activist Paul "The General" Payne to challenge the governor himself to explain the proposal.
Presenters said that the proposal negotiated by a government team and Southern Energy would give the Atlanta-based company 80 percent ownership of WAPA in a deal said to be worth nearly $400 million over 25 years.
"Governor, you can’t sell WAPA," Payne said. "You need to call this off. You can’t sell a monopoly."
Turnbull, who said during his election campaign in 1998 that he wouldn't sell the utility, emphasized that the proposed deal with Southern Energy is "not a sale." Rather, he said, the government has entered into partnership with Southern Energy. The government has a right under certain conditions to take back the 80 percent."
Another questioner, attorney Richard Austin, asked the administration officials sitting on the panel about the authority the government had to enter into such an agreement. He said the proposal sounded a lot like a sale.
"If it walks like a duck, quacks like a duck and looks like a duck. . ." Austin said. "It may be a very good deal, but the process you’re following is leaving a very bad taste."
On Wednesday morning, a caller to the "Opening Doors" talk show on WVWI/Radio One questioned whether meetings sponsored by the governor's political party should be considered unbiased forums for all viewpoints to be addressed. "There is a lot of anger out there about this process," he said. "Let it not be called that these were the public hearings" that the governor promised in his State of the Territory address earlier this month.
Later, "Topp Talk" host Sam Topp noted that the hearings "do not replace" the Senate hearings that will be held before the Legislature votes on the matter.
Tuesday night's meeting on St. Croix was the third such session. The first took place on St. John Sunday afternoon and the second was on St. on Monday night.
The immediate value of the deal to the government is about $144 million, including the forgiveness of the $31 million the government currently owes WAPA, Johan van’t Hof, a government consultant from PricewaterhouseCoopers, said at the Tuesday meeting. Of the $144 million, Southern Energy would pay the government approximately $105 million in cash up front, he said.
In addition, he said, the 25-year deal includes $12.6 million in fuel, property and gross receipts taxes; $37 million in income taxes beginning in the 10th year; $2 million in special accounts set up by the company for economic development; $41.4 million in dividends from the government’s 20 percent stake in the partnership; and $154 million through Southern Energy taking over WAPA’s bonded debt.
Questions about why the administration didn’t put the WAPA "sale" up for bid were handled by Rudolph Krigger Sr., Turnbull’s financial advisor. That issue is the focus of a pending lawsuit brought by St. Croix resident Gail Watson Chiang, who contends that the proposed acquisition is illegal because there was no competitive bidding.
"The proposal from Southern Energy was an unsolicited proposal," Krigger said. "The only provision for competitive bidding is if WAPA is getting rid of surplus property."
Lt. Gov. Gerard Luz James II was conspicuously absent from the forum on his home island. James has said publicly that he is opposed to the deal and believes the question should be put to the voters in a referendum. When asked by an audience member why a referendum wasn't being held, Krigger said that elected officials were chosen by voters to make such decisions.
"We can’t be lead by having a referendum every time" there is a decision to be made, said Krigger.
Dean Plaskett, commissioner of Planning and Natural Resources, and by virtue of that position also a WAPA board member, was on the governor’s negotiating team. He said that the public will have the chance to voice its opinion through public hearings and by lobbying senators, who must approve the deal in order for it to go through. "That’s the way the system is set up," he said.
Meanwhile, van’t Hof said the Federal Emergency Management Agency still must confirm whether the new company, V.I. Energy and Water, would qualify for assistance in the case of a natural disaster. Under the deal, the government would still own the transmission and distribution of electricity, the utility's most vulnerable segments in a hurricane.
"Verbal assurances have been given at the highest level" of FEMA, van’t Hof said. "An agreement is now being drafted."
Also still unclear is whether Hovensa would extend the discounts it now gives WAPA on fuel oil to the proposed new company. Talks on the issue are under way, administration officials said. Without the FEMA eligibility and the Hovensa discounts, the deal will not go through, van’t Hof said.
