WAPA currently owes Hovensa $4 million in delinquent fuel costs.
In an emergency meeting on Thursday, the WAPA board authorized the authority's executive director, Alberto Bruno-Vega, to borrow up to $5.6 million on a line of credit from two local banks — Banco Popular and FirstBank — to pay off its debt by Hovensa's Monday deadline.
Hovensa had asked WAPA to pay what it owed by the end of May, Bruno-Vega said on Friday, but the utility was unable to meet that deadline and instead submitted a payment plan to the oil refinery. Hovensa then gave the authority until June 14 to pay up.
"If by June 14 we did not become current in our account, they would not make any more deliveries to us, we were told," Bruno-Vega said.
Alexander A. Moorhead, Hovensa vice president for government affairs and community relations, said on Friday that WAPA and the refinery are handling the situation "privately" and he did not wish to comment at this time.
According to Bruno-Vega, WAPA has been having difficulties in meeting its financial obligations partly because of money owed the authority by the central government and its instrumentalities and partly because of $15 million in "underrecovery" from its ratepayers.
The government currently owes WAPA $15 million in water and electric bills, with the V.I. Housing Authority owing $5.2 million of that.
The "underrecovery" refers to the surcharge WAPA places on electric bills that is calculated every six months to reflect changes in the cost of fuel oil. Costs have been rising sharply in the last year, especially in the last few months, and the "levelized energy adjustment clause" surcharge has not covered those costs, as WAPA has been telling the Public Services Commission for some time.
"We are $30 million in the hole," Bruno-Vega said. "This has created an enormous strain on WAPA's finances to the extent that to gather the funds needed for Hovensa, we have become delinquent on our vendors."
Bruno-Vega said the utility also is concerned that it may not be able to "beef up" its fuel reserves for the hurricane season.
He said he has asked the Legislature through Sen. Adlah "Foncie" Donastorg to make an appropriation for the $15 million that is owed the authority by the government. He also has asked that payment of WAPA bills be a line item in each department and agency's budget.
"If the monies for electricity and water were line-itemed, those payments would not be tapped into," Bruno-Vega said. "This will help us in the future. I hope the legislators will take us seriously."
Bruno-Vega said he also has asked the Public Services Commission to implement a monthly adjustment clause that would allow the utility to keep up with fluctuations in the oil market.
If these areas are addressed, Bruno-Vega said, WAPA will be in better condition financially.
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