The best way for senators to help the V.I. Water and Power Authority is to make sure government departments and agencies have enough in their fiscal year 2010 budgets to cover the utility bills, authority officials said Wednesday.
As an autonomous government agency, WAPA’s budget is generally funded by the revenues it generates through water and power sales. High fuel prices, a lag in Levelized Energy Adjustment Clause (LEAC) rate increases and millions of dollars in outstanding utility bills have historically kept the authority running in the red on the electric side.
As of the end of last month, the government’s outstanding electric bill is $8 million, while $491,610 is owed for water.
For FY 2009, WAPA posted a $10 million loss, bringing in $266.6 million in revenue but spending $276.6 in operating expenses, WAPA Executive Director Hugo Hodge Jr. told members of the Senate’s Appropriations and Budget Committee.
The authority’s financial woes are no secret and there wasn’t anything said about them during Wednesday’s meeting that WAPA officials haven’t detailed on the Senate floor, during Public Services Commission meetings or to their own board members. To keep the authority running through the end of FY 2009, WAPA has had to cash in $2 million in certificates of deposit (CDs) to make up for the about eight-to-10 months when the price of fuel topped $100 a barrel, WAPA chief financial officer Nellon Bowry told senators.
"We don’t have plans right now to do that again, but I wouldn’t rule it out as an option," he added after the meeting.
The PSC’s recent approval a base-rate increase for the authority is expected to pick revenues up a bit for FY 2010, reducing the net deficit to $4.8 million, Hodge said. Base-rate funds cover WAPA’s payroll costs, operating expenses, debt service payments on bonds and rent, among other things. The rate increase on the electric side should yield an extra $9.7 million a year, he added.
But a decrease in sales is also projected for FY 2010, as consumers begin to conserve more on energy and switch to more alternative sources. Total operating revenues on the electric side are projected at $201.9 million, while operating expenses and deductions are estimated at $206.7 million.
Fuel is the authority’s biggest expense, eating up more than half of its budget, and is expected to cost $116.8 million for FY 2010, Hodge said.
The electric system’s capital budget — funded by bond proceeds — is $35.9 million. Right now, the authority is focused on overhauling its generating units and burying power lines on all three islands, so there is still more than $29 million in unfunded capital projects that have to be put off until more money becomes available, Hodge said.
On the water side, FY 2009 closed out with a $3.2 million loss, bringing in $37.9 million in sales but incurring $41.17 million in operating expenses. The government’s recent contribution of about $17 million helped bring down the net balance from $7.1 million in FY 2008 to $3.1 million in FY 2009, Hodge said. FY 2010 revenues on the water side are projected to come in at $38.6 million for $35.9 million expenses — leaving the authority with a profit of $2.7 million.
The water system’s capital budget, funded through local and federal grants, is $15.7 million for FY 2010.
But the picture wasn’t all doom and gloom, Wednesday. WAPA officials said that once installed, the new waste heat recovery boiler on St. Croix should generate about $12 million in savings each year. WAPA’s ongoing negotiations with alternative energy providers should wrap up soon, and once announced, those companies would help reduce the authority’s dependence on oil and help cut down on energy costs.
Meanwhile, senators can also help by allowing the authority to save on postage by issuing combined water and electric bills, by helping WAPA cover the costs associated with the installation of poles and distribution lines, and by approving a government proposal to increase the percentage of property taxes remitted to the authority for street lighting services.
Senators also heard from attorney Tom Bolt on the $40,000 budget request for the Commission on Uniform State Laws.
Present during Wednesday’s meeting were Sens. Craig W. Barshinger, Carlton "Ital" Dowe, Neville James, Wayne James, Sammuel Sanes and Patrick Simeon Sprauve.
