The bid to sell 80 percent of the V.I. Water and Power Authority to Southern Energy Inc. was defeated by a vote of 9-6 shortly before 4:30 a.m. Saturday. It came after 18-1/2 hours of testimony and three rounds of questioning by senators of government officials, consultants and Southern Co. representatives.
The vote was split on passage of the bill that would have created the Virgin Islands Electricity and Water LLC (VIEW), with four members of the majority joining the unaligned senators to kill the bill.
Voting in favor of its passage were Sens. Gregory Bennerson, Lorraine Berry, Roosevelt David, V. Anne Golden, David Jones and majority leader Allie-Allison Petrus.
Voting against the joint venture were Sens. Adelbert M. "Bert" Bryan, Donald "Ducks" Cole, Adlah "Foncie" Donastorg, Judy M. Gomez, George Goodwin, Alicia "Chucky" Hansen, Norman JnBaptiste, Almando "Rocky" Liburd and Vargrave Richards.
Friday's marathon session, which began shortly after 10 a.m. Friday and ran into the pre-dawn hours of Saturday, capped three days of territory-wide public hearings on the controversial legislative proposal that dated back to 1998, the final year of the Roy L. Schneider administration.
As questioning dragged on well into the night, some light was shed on a couple of controversial issues.
Under questioning by JnBaptiste, Southern representative David Dunbar admitted Southern had paid transportation costs for students who had testified in favor of the proposal at public hearings on all three islands. He also said Southern had paid them "by the hour for the hours they worked." This, after students had denied being coerced or paid by Southern.
Under questioning by Liburd, WAPA Executive Director Raymond George accused the government of wanting to see WAPA fail by running up $36 million in unpaid bills. "They are not paying us because they want us to not do well," George charged.
WAPA officials, however, have consistently denied that recent rate hikes are connected to the government debt.
George is one of the 15 non-union managers who would have been subject to termination under the joint venture agreement that would have extended over 25 years.
The main issues
Presentations during the day by the government, its financial consultant, PricewaterhouseCoopers, independent consultant Arthur D. Little Co., and several representatives of Southern Energy addressed the main issues raised during the three days of public hearings:
– The deal was not put out for competitive bid.
– The government could lose its 20 percent share of VIEW
– Will Hovensa's current low-priced fuel oil supply continue?
– Will the new company be eligible for Federal Emergency Management Agency benefits?
– Will WAPA employees be protected?
– Would WAPA employees retain Government Employees Retirement System benefits?
The VIEW view
Competitive bidding:
Officials from Arthur D. Little Co. reiterated the company's opinion that it was possible WAPA could have received a larger offer if the deal had been put out to bid, or possibly a smaller one.
Johann van't Hof, PwC senior vice-president, said the bidding process has the risk of attracting "uninformed bidders," who could present financial trouble to WAPA and the community. David Dunbar, SEI project director, elaborated on the bidding process. He said that with three independent companies doing analyses of the proposal, and with the "open book" approach SEI and the government had used, he was confident the rights retained by the government wouldn't be improved in a competitive bidding process. He emphasized that after three days of hearings, no one had offered any evidence that the bid process would guarantee an improved purchase price.
The 20 percent share:
Dunbar said "in no event could the government lose its 20 percent ownership interest in VIEW." The franchise agreement doesn't permit it, he said, adding that the "more compelling" answer to this question is that Hovensa's agreement to continue its fuel-oil supply pricing is conditioned, in part, on the government maintaining its 20 percent ownership.
FEMA benefits:
FEMA has written to the governor, Dunbar said, stating that the assets to be retained by WAPA would continue to be eligible for disaster assistance.
Employee benefits:
SEI representatives all testified that WAPA employees will be treated fairly. There will be no layoffs, all union employees will be retained, VIEW will honor WAPA's collective bargaining agreement and all but 15 non-union employees will be retained. In addition, SEI vowed to protect employees under its own retirement plan should an agreement with the GERS not be worked out. SEI was expecting a letter from the U.S. Labor Department on the issue "soon."
Paulette Rabsatt, the governor's deputy assistant for fiscal and economic affairs, stressed that the restructuring of WAPA is not to raise ready cash, but to stabilize rates, improve quality and reliability of service, and encourage outside investors.
She said the proposal projects that the government would receive more operating revenue from 20 percent of the new company than it receives from 100 percent of WAPA now. Since its acquisition of WAPA in 1964, the government has not received any significant returns on the investment, she said.
J.R. Harris of Southern said he had had a letter in June from Bryan asking two questions: 1) Are the people of the V.I. getting a good deal from SEI? 2) Will SEI live up to its commitments?
Harris said the answer was an unqualified "yes."
"The government will receive a significant return on its ownership interest in the company, rates will effectively decline over time while the quality of service will improve, employee rights and benefits will be maintained or improved and the local community will benefit from a new charitable and economic development program," he said.
He added, "The V.I. is strategic to us because we see substantial growth elsewhere in the Caribbean and we believe in the potential for the V.I.; simply put, the transaction is a core part of our strategy in the region. Remember, if we don't grow, you don't grow."
But an underlying objection of many opponents to the sale was less explicit — the idea that the sale would be an "insult," a rejection of the territory's cultural heritage.
SEI officials had promised to provide $1 million in economic development financing, a $1 million credit-assistance program for local vendors, and a community charity and investment program funded by 1 percent of VIEW's net annual income.
The negative view
The analyses of both Campbell Malone, legislative post auditor, and Constance Krieger, acting legislative chief counsel, were firmly, even vehemently, against the SEI proposal.
In her introduction, Kreiger said the document was "simply a tool. . .the counsel cannot ..professionally favor one legislative outcome over another." This statement, however, didn't prevent the counsel from rendering an extremely critical view of the legislation.
She said the "bill is replete with archaic and superfluous language. . .which invokes statutory construction and interpretation horrors." Kreiger questioned the intent of the bill in its entirety, at one point calling it "draconian." After citing numerous law decisions, Krieger concluded that the issues raised in her analysis should be examined during the Legislature's deliberations as to the bill's constitutionality.
In his lengthy analysis of the legislation, Malone devoted the first 11 pages to criticism of Senate President Vargrave Richards and a special Senate committee.
Malone separated his comments about the bill into 10 "zones." These included questions on the bill's fundamental business and technical evaluation of WAPA, management reform, a cost/bene
fit analysis, ownership control by regulatory means, bankruptcy risk and re-deployment of capital.
In conclusion, Malone said he "does not recommend that this measure be approved by the Legislature."
The political maneuvering
The session was prolonged far beyond what already promised to be a long day by the combined efforts of Sen. Adelbert "Bert" Bryan and Alicia "Chucky" Hansen.
In the morning session they managed, through a series of parliamentary parlor games, to require the reading aloud of 60 pages of documents by the Legislature's post auditor and legal counsel.
The afternoon session, which got under way a little after 3 p.m., was held hostage by Hansen and Bryan for more than an hour as they raised repeated points of order and points of information.
Senate President Richards said he would start the session with testimony from SEI representatives. Hansen and Bryan wouldn't hear of that. They insisted the post auditor's analysis should come first. It was decided that a summary of the post auditor's analysis would be heard after SEI testimony.
Hansen again took the floor, complaining that an SEI testifier should be held to five minutes like testifiers in the hearings were. As Hansen carried on, the partisan crowd applauded, and Richards called a recess. J. R. Harris, SEI vice-president, had been able to get out about three sentences at this point.
After the recess Sen. Allie-Allison Petrus apologized for the "lack of respect this body has shown." He said it was "not indicative of all of us, and we ought to be ashamed."
The end
Southern spokesperson James Peters said the company was disappointed the agreement was defeated.
"However, we do respect the legislative process and the people of the Virgin Islands," Peters said. "We wish the people of the Virgin Islands the best of luck in their future endeavors."
He sidestepped the question of whether Southern would pursue any further relationship with the government.
