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PSC Critical of WAPA's Approach to Power Suppliers

July 28, 2004 – The Public Services Commission and the Water and Power Authority profess to have a common goal — to save ratepayers money. But they differ markedly on the means of reaching that goal.
The two entities — frequently embattled over who has the power to do what — locked horns again Tuesday.
The PSC took issue with WAPA's recent announcement that it had sent a request for proposals not only to CWT but also to four other potential power providers. By law, the authority is mandated to seek alternative sources of power.
In a June meeting, WAPA's governing board voted to hire the firm of Skadden, Arps, Slate, Meagher & Flom at a cost of $50,000 to assist the authority in developing a request for proposals for alternative sources of energy. WAPA announced that the RFP would be sent to five companies: Caribbean Energy Resources Corp., Caribe Waste Technologies, Florida Power and Light, St. Croix Renaissance Group and Sea Solar.
The commission took issue with WAPA sending out the RFP. Valencio Jackson, PSC chair, said the utility should negotiate only with companies that have been certified by the PSC as small power producers.
Sam Hall, WAPA attorney, disagreed. "We don't have a handle on what it costs to purchase power," he said. "The RFPs are a mechanism for asking the companies."
Hall said the RFPs are a way to provide companies WAPA's technical requirements and "for them to tell us what they can offer." One issue for WAPA is avoided costs – the costs that the utility will not incur as a result of not producing the power that it will purchase. These include the costs of producing water, maintaining unused equipment, and paying wages and benefits of employees needed to step in when the alternate energy source is not available to produce power.
Commission member Verne David asked if WAPA has the authority to issue the RFPs. Jackson said he didn't know. "I have to go back to our attorney," Jackson said, adding,. "I don't believe they have the authority in this specific instance."
Jackson objected to companies not located in the territory and not having a local business license being considered.
One of the five companies, St. Croix's Renaissance Group, was represented at Tuesday's meeting. The firm bought the old 1,200-acre St. Croix Alumina site on St. Croix's South Shore about two years ago.
Myron Allick, Renaissance vice president, and Jehangir Zakaria, the company's power and utilities engineer, presented their case for supplying alternative power to WAPA. Zakaria stressed that the company uses coal as fuel, saying the costs are "significantly lower" than they would be for oil. Also, he said, the company is already producing water for sale locally, and it could be ready to go as a power provider in "six months to a year."
The commissioners were a hard sell. "What about emissions?" asked Alric Simmonds. Zakaria said coal is a "clean burn." The facility has a furnace 100 feet high, he said, where the particles "completely burn before exit." Simmonds said, "There will be emissions." Zakaria maintained that the emissions would be limited. He said the company would do an emission study to determine what areas, if any, would be affected.
Commission member Verne David asked, "What would you do if WAPA says no?" Allick was quick to reply that the company is there for the long run, with or without WAPA. "We have bought homes on St. Croix," he said. "Our children are going to school here."
Allick said the company would like to supply WAPA and that "it would be an integral part" of the Renaissance operation. "And we have tangible assets" locally, he said. It is common for potential power producers from off-island, such as CWT, to have a local presence only on paper until they get the financing from a utility to build a plant.
The commission voted unanimously to hire a hearing examiner to determine whether the Renaissance Group can be certified as a power provider. However, further questions were raised.
"Who will pay?" David asked of the examiner's study. He and Jackson said by law it's the utility. Hall objected. "We have issues with the company about location and permits," he said of Renaissance Group.
After some discussion and consultation by Allick with Renaissance attorney Kathleen Mackay, he said his company would cover up to $10,000 of the investigation cost. WAPA then agreed to pay any balance there might be.
The board also heard from Bevan R. Smith Jr., manager of the V.I. Energy Office. Smith said he had spoken with Alberto Bruno-Vega, WAPA executive director, about utilizing smaller local energy producers of less than 10 megawatts. He said his office is conducting workshop programs for small energy producers, "even using wind-generating systems."
Mandated Investigation of Ferry Rates Begins
Also Tuesday, the board initiated a mandated rate investigation of the fares charged by the two ferry companies linking St. John and St. Thomas, Varlack Ventures and Transportation Services of St. John.
Capt. Loredon Boynes of Transportation Services expressed frustration at trying to find out who is in charge of addressing a problem his company is experiencing. "If the PSC doesn't do it, who is in charge?" he asked.
Boynes said safari buses carrying a multitude of passengers travel between the islands by barge, thereby avoiding paying the ferry fares. Commission member Desmond Maynard said this is a "long-standing problem" that "needs to be addressed."

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