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WAPA to Seek Proposals from Other Energy Sources

June 28, 2004 – The Water and Power Authority is seeking an alternative source from which to purchase energy.
In a meeting Tuesday, WAPA's governing board voted to hire Skadden, Arps, Slate, Meagher & Flom at a cost of $50,000 to assist the authority in developing requests for proposals for alternative sources of energy. The RFP will be sent to five companies: Caribe Waste Technologies, Florida Power and Light, Sea Solar, Renaissance Group and Caribbean Energy Resources Corp.
By law, the authority is mandated to seek alternative sources of power. The Legislature wants WAPA to enter into a purchase-of-power agreement with Caribbean Energy Resources, a company recently certified as a small power producing company by the Public Services Commission, in the hope of creating jobs on St. Croix. (See "WAPA Deal Key to Industrial Complex, Senators Told".)
WAPA decided to send out the RFP because of the number of companies that have approached the authority offering to sell power.
"I think the only way WAPA can be fair is through the RFP process," the utility's board chair, Daryl Lynch, said. "I am going to make it clear today that I have no problems buying an alternative source of power as long as the avoided cost is a benefit to us."
WAPA's executive director, Alberto Bruno-Vega, told Lynch that the authority is not obligated to purchase any power where the price would exceed its avoided costs.
Avoided costs are the costs that WAPA will not incur as a result of not producing the power that it will purchase. Certain costs cannot be avoided, such as maintenance of unused equipment and wages and benefits of employees needed to step in when the alternate energy source is not available to produce power.
Lynch said the agreement must stipulate that WAPA will purchase the power on a need basis.
"I think the RFP route will put us in a better position," board member Claude Molloy said. "With the RFP we're being fair, and we can select the one with the lowest avoided cost."
Bruno-Vega said after the meeting that the board is moving to find an alternative source of power at this time mainly because of increasing fuel costs.
Electric, Water System Budgets Approved
In other action, the board approved the capital and operating budgets for WAPA's electric and water systems.
Lynch applauded the board's financial committee for having completed the budget before June 30, the end of the utility's fiscal year. "This is the first time in years that the governing board has approved its fiscal budget so that the authority can conduct its business by July 1," he said.
The electric system operating budget projects:
– Nearly $143 million in revenues.
– $130.1 million in operating expenses.
– $9.9 million in other expenses.
– $2.6 million in net income before the Payment in Lieu of Taxes (PILOT).
The electric system capital budget totals $37.6 million.
The water system operating budget projects:
– $27.1 million in revenues.
– $23.8 million in operating expenses.
– Nearly $2 million in other expenses.
– $1.2 million in net income before the PILOT.
The water capital budget totals $8.2 million.
The board also approved payment to the PSC of $117,000. Bruno-Vega said the utility has paid the PSC $1.3 million in assessments so far this year and $3.5 million in assessments over the last three years.
"Besides all the bickering of the PSC, we have been paying them!" Molloy said.
The board also approved:
– A $367,044 contract with Do Right Construction for a new warehouse and storage station at the Randolph Harley Plant.
– A $90,170 contract with Environmental Resources Technology Inc. for the Richmond Facility Subsurface Site Remediation Project.
Bruno-Vega said petroleum products were found below ground at the Richmond facility and that needs to be cleaned up to be in compliance with the U.S. Environmental Protection Agency. "We have to remediate the impact of those spills," he said.
Board members present for the meeting were Roy Anduze Jr., Yolanda Deterville, Alphonso Franklin, Cheryl Boynes Jackson, Lynch, Molloy and Andrew Rutnik.

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