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WAPA in Talks with Puerto Rico Utility

July 25, 2008 — The V.I. Water and Power Authority has been in discussions with the Puerto Rico Electric Power Authority (PREPA) about joining St. Thomas into the Puerto Rico grid with an underwater cable as a means of relieving the territory's brutally high utility costs.
WAPA Executive Director Hugo Hodge, Jr. reported to the WAPA Board during its annual governing meeting Thursday that he and several senior staff members met with PREPA executives last week. Former WAPA head Alberto Bruno-Vega acted as a PREPA liaison to the Virgin Islands delegation, Hodge said.
"There was talk about a possible submarine cable," Hodge said. "They have a Vieques and Culebra cable loop connecting the Puerto Rican mainland. It is pretty close to St. Thomas, and not only that but the route is shallow. They are on the same shelf."
Puerto Rico generates 72 percent of its electricity from oil, Hodge said — less than the Virgin Islands. While it has higher utility rates than many stateside jurisdictions, it is still substantially lower than the Virgin Islands' rates.
Hodge added that Puerto Rico is expanding its use of natural gas, modifying existing generators to run on the less expensive and cleaner fuel. Hodge said prospects looked good for a cable because both parties would get a financial boost from it.
"They are much in favor of it," Hodge said. "Their growth is projected to be stagnant for the next few years. We are new customers for them." Expanding its customer base would bring in more money for PREPA and spread out its costs, making it more efficient, he said.
They also talked about piping natural gas to the Virgin Islands and running WAPA's generators on gas, Hodge said, but suggested that was less likely in the immediate future.
WAPA plans to have regular, perhaps monthly meetings with PREPA and pursue other cooperative arrangements. PREPA has outstanding training programs that WAPA employees may begin taking advantage of, and the two utility companies are discussing a mutual aid agreement for hurricane recovery, Hodge said.
In other actions, Acting Chief Financial Officer Maurice Sebastien presented WAPA's fiscal year 2009 budget and the board approved it with a series of uncontested votes. The utility is losing money at a fast clip, projecting net losses on the electrical side of more than $2 million and on the water production side at $308,000.
Sebastien said high fuel costs and the difference between what the utility pays for fuel and what it charges through the customer fuel charge known as the LEAC (levelized energy adjustment clause) were the main culprits. He painted a dire picture of the consequences for the utility if the V.I. Public Services Commission prevents WAPA from raising rates at its next meeting.
"If the PSC does not approve our emergency rate increases for the water side of our budget, we are certain — not likely, but certain — to drop below the debt ratio required by our bonds, putting us in jeopardy of default on bonds and certainly affecting or bond ratings," Sebastien said.
The board voted to approve:
– 2009 Electric Operating Budget with projected operating revenues of $344 million, an additional $9.8 million in other income and projected operating expenses of $336 million;
– 2009 Water Systems operating budget with projected operating revenue of $47.2 million, projected operating expenses of $46 million and another $1.5 million in bond interest payments, and;
– the electric capital budget in the amount of $50.7 million and the water capital budget in the amount of $14.6 million.
It also voted on a new slate of officers for the board. Juanita Young replaces Cheryl Boynes- Jackson as Chairperson. Brenda Benjamin replaces Alphonso Franklin, (who recently retired from the Board) as Vice Chairperson, and Noel Loftus replaces Juanita Young as Secretary.
Present were: Young, Benjamin, Loftus, Boynes-Jackson, Gerald Groner and Donald Francois.
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July 25, 2008 -- The V.I. Water and Power Authority has been in discussions with the Puerto Rico Electric Power Authority (PREPA) about joining St. Thomas into the Puerto Rico grid with an underwater cable as a means of relieving the territory's brutally high utility costs.
WAPA Executive Director Hugo Hodge, Jr. reported to the WAPA Board during its annual governing meeting Thursday that he and several senior staff members met with PREPA executives last week. Former WAPA head Alberto Bruno-Vega acted as a PREPA liaison to the Virgin Islands delegation, Hodge said.
"There was talk about a possible submarine cable," Hodge said. "They have a Vieques and Culebra cable loop connecting the Puerto Rican mainland. It is pretty close to St. Thomas, and not only that but the route is shallow. They are on the same shelf."
Puerto Rico generates 72 percent of its electricity from oil, Hodge said -- less than the Virgin Islands. While it has higher utility rates than many stateside jurisdictions, it is still substantially lower than the Virgin Islands' rates.
Hodge added that Puerto Rico is expanding its use of natural gas, modifying existing generators to run on the less expensive and cleaner fuel. Hodge said prospects looked good for a cable because both parties would get a financial boost from it.
"They are much in favor of it," Hodge said. "Their growth is projected to be stagnant for the next few years. We are new customers for them." Expanding its customer base would bring in more money for PREPA and spread out its costs, making it more efficient, he said.
They also talked about piping natural gas to the Virgin Islands and running WAPA's generators on gas, Hodge said, but suggested that was less likely in the immediate future.
WAPA plans to have regular, perhaps monthly meetings with PREPA and pursue other cooperative arrangements. PREPA has outstanding training programs that WAPA employees may begin taking advantage of, and the two utility companies are discussing a mutual aid agreement for hurricane recovery, Hodge said.
In other actions, Acting Chief Financial Officer Maurice Sebastien presented WAPA's fiscal year 2009 budget and the board approved it with a series of uncontested votes. The utility is losing money at a fast clip, projecting net losses on the electrical side of more than $2 million and on the water production side at $308,000.
Sebastien said high fuel costs and the difference between what the utility pays for fuel and what it charges through the customer fuel charge known as the LEAC (levelized energy adjustment clause) were the main culprits. He painted a dire picture of the consequences for the utility if the V.I. Public Services Commission prevents WAPA from raising rates at its next meeting.
"If the PSC does not approve our emergency rate increases for the water side of our budget, we are certain -- not likely, but certain -- to drop below the debt ratio required by our bonds, putting us in jeopardy of default on bonds and certainly affecting or bond ratings," Sebastien said.
The board voted to approve:
- 2009 Electric Operating Budget with projected operating revenues of $344 million, an additional $9.8 million in other income and projected operating expenses of $336 million;
- 2009 Water Systems operating budget with projected operating revenue of $47.2 million, projected operating expenses of $46 million and another $1.5 million in bond interest payments, and;
- the electric capital budget in the amount of $50.7 million and the water capital budget in the amount of $14.6 million.
It also voted on a new slate of officers for the board. Juanita Young replaces Cheryl Boynes- Jackson as Chairperson. Brenda Benjamin replaces Alphonso Franklin, (who recently retired from the Board) as Vice Chairperson, and Noel Loftus replaces Juanita Young as Secretary.
Present were: Young, Benjamin, Loftus, Boynes-Jackson, Gerald Groner and Donald Francois.
Back Talk


Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.