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HomeNewsArchivesPSC Authorizes WAPA to Offset Omar Damages with Self-Insurance Fund

PSC Authorizes WAPA to Offset Omar Damages with Self-Insurance Fund

Dec. 16, 2008 — After a late start and about six hours of debate on ferry and power-company issues, Public Services Commission board members Tuesday only gave the thumbs up to one item on their agenda: revising the terms of an authorization that would allow the V.I. Water and Power Authority to dip into its self-insurance fund for damages incurred during Hurricane Omar.
WAPA was previously authorized to draw down up to $3 million from the PSC-controlled Self Insurance and Hazard Mitigation Fund to cover the damages, and had anticipated that some of the money would be reimbursed by the Federal Emergency Management Agency (FEMA). During a meeting Tuesday on St. Thomas, WAPA officials said FEMA would most likely cover 75 percent of the costs if the authority could provide the remaining 25-percent match. The arrangement would probably not eat up the entire $3 million, so the terms of the authorization could be revised to allow the authority to dip into the fund for up to $3 million to pay its projected 25-percent share and whatever other costs FEMA decided not to cover.
The revision was unanimously approved, with votes in favor from board members Joseph Boschulte, Donald "Ducks" Cole, Verne C. David and M. Thomas Jackson.
Much of the discussion Tuesday centered on a proposed interconnection agreement between the authority and Tutu Park Mall, which was certified by the PSC two months ago as a small power provider or "qualifying facility." The mall has already entered into a lease-purchase agreement with Earth, Wind and Power for the two 50-kilowatt wind turbines that have already been installed on the property. The two parties had 60 days to hammer out the interconnection agreement, or face the matter coming back to the PSC for further action.
During a three-day workshop held in October by the PSC, Earth, Wind and Power attorney Emily Sabo said the mall did not plan to sell power back to WAPA, but would instead tap into the utility's power grid, allowing Tutu Park to blend its power sources and reduce its tenants' electricity bills. The turbines would be energized through its connection to the grid, and without the hookup, would not be able to produce power, according to Sabo.
Since then, negotiations between WAPA and Tutu Park have progressed, but discussions hit a wall on one issue: The authority's proposed connection point does not allow energy to flow back and forth in two directions, Sabo explained during Tuesday's PSC meeting. This would hamper the mall from installing additional turbines in the future and selling power back to WAPA if it chooses, she said.
Echoing the concerns of the PSC board members, WAPA head Hugo Hodge Jr. said the authority is not against renewable-energy projects, but was surprised by the recent discovery that Tutu Park had proposed selling the power it produced back to its tenants at a cost lower than WAPA's. In order for an entity to sell power, it has to be regulated by the PSC, Hodge said.
If the mall chose to do so, federal regulations would exempt it from regulation by an entity such as the PSC, Sabo said.
"This is probably not what we're looking at doing, though," she said. "But we will want to install more turbines and sell the power back to WAPA, and the proposed connection point does not allow us to do that."
Sabo later conceded that the mall would work within the parameters set by WAPA, but noted that both local and federal regulations entitled the mall, as a qualifying facility, to connect to the grid in a way that would allow for the back-and-forth flow of energy.
Board members also discussed:
— whether franchise ferry companies running between St. Thomas and St. John still need to factor a $1.10 fuel surcharge into their ticket prices now that the cost of fuel has declined. After ferry-boat representatives said the fuel charge was still needed to make up for a decline in ridership and cover the cost of outstanding payments to its fuel vendors, board members said they would not make a decision on the matter until the ferries' ongoing rate investigation is complete;
— the fact that Citigroup has asked to renegotiate the terms of its fuel-hedging agreement with WAPA , leaving the authority looking for other banks to work with so it can capitalize on the current drop in fuel prices. The hedging program seeks to reduce the volatility of the price of oil, which is subject to fluctuations in the fuel market and allows WAPA to set an anticipated cap and floor price for fuel — meaning that the utility will not have to pay more than a particular per-barrel price if rates increase; and
— outstanding complaints filed at the PSC from WAPA customers.
Absent from Tuesday's meeting were board members Sirri Hamad and Alecia Wells.
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Dec. 16, 2008 -- After a late start and about six hours of debate on ferry and power-company issues, Public Services Commission board members Tuesday only gave the thumbs up to one item on their agenda: revising the terms of an authorization that would allow the V.I. Water and Power Authority to dip into its self-insurance fund for damages incurred during Hurricane Omar.
WAPA was previously authorized to draw down up to $3 million from the PSC-controlled Self Insurance and Hazard Mitigation Fund to cover the damages, and had anticipated that some of the money would be reimbursed by the Federal Emergency Management Agency (FEMA). During a meeting Tuesday on St. Thomas, WAPA officials said FEMA would most likely cover 75 percent of the costs if the authority could provide the remaining 25-percent match. The arrangement would probably not eat up the entire $3 million, so the terms of the authorization could be revised to allow the authority to dip into the fund for up to $3 million to pay its projected 25-percent share and whatever other costs FEMA decided not to cover.
The revision was unanimously approved, with votes in favor from board members Joseph Boschulte, Donald "Ducks" Cole, Verne C. David and M. Thomas Jackson.
Much of the discussion Tuesday centered on a proposed interconnection agreement between the authority and Tutu Park Mall, which was certified by the PSC two months ago as a small power provider or "qualifying facility." The mall has already entered into a lease-purchase agreement with Earth, Wind and Power for the two 50-kilowatt wind turbines that have already been installed on the property. The two parties had 60 days to hammer out the interconnection agreement, or face the matter coming back to the PSC for further action.
During a three-day workshop held in October by the PSC, Earth, Wind and Power attorney Emily Sabo said the mall did not plan to sell power back to WAPA, but would instead tap into the utility's power grid, allowing Tutu Park to blend its power sources and reduce its tenants' electricity bills. The turbines would be energized through its connection to the grid, and without the hookup, would not be able to produce power, according to Sabo.
Since then, negotiations between WAPA and Tutu Park have progressed, but discussions hit a wall on one issue: The authority's proposed connection point does not allow energy to flow back and forth in two directions, Sabo explained during Tuesday's PSC meeting. This would hamper the mall from installing additional turbines in the future and selling power back to WAPA if it chooses, she said.
Echoing the concerns of the PSC board members, WAPA head Hugo Hodge Jr. said the authority is not against renewable-energy projects, but was surprised by the recent discovery that Tutu Park had proposed selling the power it produced back to its tenants at a cost lower than WAPA's. In order for an entity to sell power, it has to be regulated by the PSC, Hodge said.
If the mall chose to do so, federal regulations would exempt it from regulation by an entity such as the PSC, Sabo said.
"This is probably not what we're looking at doing, though," she said. "But we will want to install more turbines and sell the power back to WAPA, and the proposed connection point does not allow us to do that."
Sabo later conceded that the mall would work within the parameters set by WAPA, but noted that both local and federal regulations entitled the mall, as a qualifying facility, to connect to the grid in a way that would allow for the back-and-forth flow of energy.
Board members also discussed:
-- whether franchise ferry companies running between St. Thomas and St. John still need to factor a $1.10 fuel surcharge into their ticket prices now that the cost of fuel has declined. After ferry-boat representatives said the fuel charge was still needed to make up for a decline in ridership and cover the cost of outstanding payments to its fuel vendors, board members said they would not make a decision on the matter until the ferries' ongoing rate investigation is complete;
-- the fact that Citigroup has asked to renegotiate the terms of its fuel-hedging agreement with WAPA , leaving the authority looking for other banks to work with so it can capitalize on the current drop in fuel prices. The hedging program seeks to reduce the volatility of the price of oil, which is subject to fluctuations in the fuel market and allows WAPA to set an anticipated cap and floor price for fuel -- meaning that the utility will not have to pay more than a particular per-barrel price if rates increase; and
-- outstanding complaints filed at the PSC from WAPA customers.
Absent from Tuesday's meeting were board members Sirri Hamad and Alecia Wells.
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.