May 8, 2006 – Negotiations between the V.I. Water and Power Authority and Innoventor Technologies, the company selected by the utility to be the small-power provider for St. Croix, have been terminated, according to WAPA Executive Director Alberto Bruno-Vega.
During a press conference held Monday on St. Croix, Bruno-Vega cited various factors for the termination, including the fact that Innoventor experienced "organizational issues" during the negotiation process.
He said that each time the company's structure changed, new issues about the terms and conditions of the power-purchase agreement were introduced, forcing both entities back to the drawing board.
Bruno-Vega also said that after the Legislature granted WAPA an additional 60-day extension to complete negations with Innoventor, the company did not come to the table until April 16 to discuss new terms and conditions for the purchase agreement (See "Senate Approves Extension for WAPA-Innoventor Contract").
Bruno-Vega said that WAPA was ready to negotiate in mid-February.
He added that the termination of negotiations keeps WAPA from achieving its short-term goal of decreasing the territory's dependence on imported fossil fuels and offering lower electric rates to customers.
When contacted Monday afternoon, Innoventor owner Paul Engler made similar statements, and explained that when Innoventor did change players, the company had to reassemble a new team of experts – ranging from technicians to legal counsel – to help negotiate the contract.
"That was why we had asked for the extension," he said. "And during that time, we were very busy trying to get everyone we needed that was knowledgeable in wind technology."
While Engler added that both Innoventor and WAPA negotiated in "good faith," he also said that both parties were unable to come up with a "fair deal" by the deadline set in the local Jobs Creation Act, which stipulates that the WAPA submit a negotiated contract with the company to the Public Services Commission by a certain date.
"We wanted to make sure, since this was going to be a 15-year contract, that it had to be 100 percent fair to both parties," Engler said. "And we negotiated all the way through…got right down to the final deal, but there were just three or four critical issues we couldn't resolve."
While Engler said he was "disappointed" that a final contract couldn't be ironed out, he also said that Innoventor harbored "no ill will" toward WAPA, and would "probably" be looking at other opportunities in the Caribbean.
During the press conference, Bruno-Vega said that letters about the status of negotiations were sent to Sen. Lorraine L. Berry, acting Gov. Vargrave Richards and PSC Chairwoman Alecia Wells.
However, on Monday evening, Bruno-Vega added that unless the Legislature decides to renew the conditions of the Job Creation Act, WAPA would not be going back to the Senate to discuss future negotiations.
"The Act has served its purpose," Bruno-Vega said. "We could not reach an agreement with the entity that met the requirements of the RFP (Request for Proposals) we issued, so our recommendation to the Senate would be to let WAPA do their thing by issuing a normal RFP through our own competitive bidding process."
On Monday afternoon, Berry said that since she had not yet been able to review Bruno-Vega's letter, she did not know whether WAPA would have to come back to the Senate to discuss the "legal ramifications" of terminating negotiations. "I would prefer not to comment until I have read the document," she said.
During the conference, however, Bruno-Vega said that WAPA would continue its quest to bring relief to V.I. residents, would be working with Congress to fulfill its federal mandate to define an energy strategy for the territory, and would trying to comply with recommendations made in an energy assessment conducted by the U.S. Department of Interior and the Pacific Power Association.
The assessment, which is federally funded, would be completed in June, he said, and would identify and evaluate potential strategies or projects which could help WAPA reduce its dependence on fossil fuel over the next five years, increase energy conservation in the territory, and maximize the use of local energy resources such as wind, solar power and the ocean.
"We're basically waiting for any guidelines that might be set for us by the federal government," he said Monday. "And I hope that's what the Legislature will let us do."
During the conference, Bruno-Vega also said WAPA would be "taking advantage of" federal funding given to the territory through power line grants issued through the federal Energy Policy Act. Through this policy, WAPA would be given approximately $1 million to strengthen its transmission and distribution system, and up to $2.4 million over a four-year period for projects to enhance insular energy independence.
Furthermore, Bruno-Vega said the utility would be working closely with Hovensa to improve its operations, and will be installing waste heat recovery steam generators on its units to maximize the generation of energy at its power plants.
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