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HomeNewsArchivesWAPA BOARD APPROVES $70 MILLION BOND ISSUE

WAPA BOARD APPROVES $70 MILLION BOND ISSUE

April 2, 2003 – The Water and Power Authority board met in special session on Wednesday to approve a new $70 million bond issue and review other matters related to approval by the Public Services Commission last week of a 9.6 percent increase in the authority's electric rate.
On March 26, the commission agreed to the increase with the stipulation that the PSC would implement an "unprecedented" level of control over the utility.
The rate increase will enable WAPA to secure the bond issue, with the proceeds destined primarily for capital projects.
The PSC hearing examiner's report on WAPA's rate increase request stated that bond rates are at an all-time low, and therefore the timing is advantageous.
Robert Vodzack, the authority's chief financial officer, agreed. In presenting his bond financing schedule, he noted that "bond interest rates are the lowest in years." But, he added, "We should get there as soon as we can, with the situation overseas." Closing on the bond issue is scheduled for May 21; meetings with bond insurers in New York are set for April 9 and 10.
WAPA board member Andrew Rutnik said, "Three or four years ago, this would have been a dream." He complimented Vodzack and WAPA's executive director, Alberto Bruno Vega, on their efforts.
Along with paying off an $18 million previous line of credit, the bond proceeds are to fund the following capital projects:
– A new generator for St. Thomas — $15 million
– A new substation for St. Thomas — $5.1 million
– A new waste heat boiler for St. Croix — $10 million
– Extension of underground feeder No. 8 to Frederiksted on St. Croix — $6.6 million
– Replacing of a burner on unit 13 on St. Thomas — $3 million
– Reblading of the turbine and retubing of the boiler on unit 11 on St. Croix — $6.5 million
– Debt service of $6.5 million
The board voted unanimously to approve the bond issue and the listed projects.
Bruno said two other "critical" projects originally slated for funding from the bond proceeds will instead have to be paid for out of internally generated WAPA revenues. These are the laying of a third submarine cable linking St. Thomas and St. John and the repair of a broken rotor on Unit 11 on St. Thomas.
Rutnik, a St. John resident, said funding the new cable out of WAPA revenues is "unacceptable … not just because I live on St. John, but I will not subjugate St. John to that scenario. It's growing by leaps and bounds. It would be a blow to the economic stability of this government."
Glen Rothgeb, WAPA assistant executive director, said later that the utility's internal net funds should be sufficient to cover both projects.
The control stipulations set by the PSC for approving the rate increase last week are.
– Requiring justification of the final designs of the projects.
– Reviewing the methods chosen for each project.
– Reviewing the progress of each project implementation though the PSC's consultants, Georgetown Consulting Group.
– Monitoring the impact of these projects on the level of service to WAPA customers.
Board member Claude A. "Tappy" Molloy asked concerning the PSC: "Are they going to run WAPA? They don't have the experts."
Bruno pointed out that the PSC relies on consultants. Rutnik said the PSC had in the past become "frustrated" with some of WAPA's prior executive directors, and had felt that "WAPA was ignoring them." Bruno said he didn't object to the PSC's requirements, not did he feel that the commission was trying to micro-manage the authority.
The WAPA board voted to pay the PSC a $150,000 assessment – due Friday – for consultant expenses related to the rate increase, street lighting and the levelized energy adjustment clause, or LEAC.
The board also approved payment of $107,830 to the Planning and Natural Resources Department for its annual assessment of air emission fees for the Richmond power plant on St. Croix and the Randolph E. Harley plant on St. Thomas. The amount includes a 10 percent interest charge, which board members objected to, as WAPA had just received the 2001 bill, which should have been sent last year.
Bruno said he was aware of the situation and would discuss the matter with DPNR officials. He also said the V.I. government currently owes WAPA in excess of $10 million.
The board will hold its regular April meeting on St. Thomas on April 24.
Attending Wednesday's special meeting were Carol Burke, chair, and members Alphonso Franklin, G. Luz James, William Lomax, Molloy and Rutnik. Two members, Attorney General Iver Stridiron and Ira M. Hobson, Housing Parks and Recreation commissioner, were absent.

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