Because various parts of the V.I. government are again millions of dollars behind on their utility bills, the V.I. Water and Power Authority is cash-starved and has been falling behind in fuel payments to Hovensa, WAPA officials told its governing board Tuesday.
In his first board meeting since coming onboard this month, WAPA’s new Chief Financial Officer Joseph Boschulte said the utility is past due on roughly $8 million in fuel oil payments.
Several board members said they were concerned Hovensa might start insisting on advance payment, as it did for part of 2008. If that were to happen, WAPA would have to take out loans, with the cost that entails, in order to buy fuel while awaiting customer payment.
Hodge said circumstances had not progressed that far yet, but action needed to be taken. Board chairman Juanita Young asked if it would be helpful if the V.I. government were to guarantee a loan to cover the shortfall, thus helping WAPA get better terms.
"The only help we would need right now is to have all the bills paid," Hodge replied. "We have government receivables of about $14 million, so there is no reason to go to the government to guarantee a loan. We just need them to pay those debts."
Of that outstanding debt, the electrical bills for the territory’s streetlights account for about $6 million and Gov. Juan F. Luis Hospital on St. Croix is again in arrears, Hodge said.
"We have to make some decision there," Hodge said of the hospital’s bills. "It is already back up to $2.9 million, and their agreement is not being kept at all," he said.
The board discussed the possibility of cutting off power to the hospital or any other government agency, and the problems with cutting power to a hospital. No decisions were made.
"Just from a fiscal standpoint, I think there will have to be a paradigm shift, where you can’t use the power if you don’t pay," said Boschulte.
With oil prices rising, there is yet more urgency to WAPA’s plans to wean itself off oil, Hodge said. To that end, WAPA is currently studying the feasibility of bringing in barges of pressurized natural gas to its docks.
If the gas can be economically delivered and stored in the territory, then it has a lot of potential to lower costs. Many, even most, of the current generators can fairly easily be converted to run on natural gas, which burns much cleaner and reduces turbine maintenance, Hodge said.
And natural gas currently costs less than a third what oil costs, saving huge sums over time.
In other news, a WAPA study commissioned in 2010 on the feasability of connecting to Puerto Rico’s grid should be complete by May, Hodge said.
Being connected to Puerto Rico’s lower-cost electricity may save enough to justify the cost of the undersea cables. Also, by providing a steady, stable outside source of power to meet the base load, such a connection would make it much easier to incorporate more renewable sources of power (like wind and solar), he said, because it would provide a backstop for when the wind is low and the sun not shining.
WAPA should have the details ready for a request for proposal (RFP) for solar power generation in February, and Hodge said he is hoping wind-measuring devices to study the best locations for industrial-level wind power generation are up soon so an RFP may be sent out in six months or so.
More immediately, WAPA’s governing board voted Tuesday to approve an extension to a contract with Zenon Construction to build a security fence, gate and several guard booths around the outer limits of its power plant in Estate Richmond on St. Croix.
There were several delays and by the terms of the contract, there will now be a $200 per-day penalty for each day from Dec. 24, when the project was to be completed, through the actual completion. The contract, which will not cost WAPA or ratepayers additional money, was extended until Feb. 28.
The fencing, gate and booths are contracted to cost almost $500,000, and is entirely paid for by grants from the U.S. Department of Homeland Security, V.I. Department of Planning and Natural Resources and the U.S. Environmental Protection Agency.
The board also approved letting WAPA’s water system draw down its working capital line of credit, taking $2.5 million of the total of $4 million to pay WAPA’s electrical system for fuel oil the electrical system routinely purchases on behalf of both of its divisions.
All votes were without dissent. Board member Gerald Groner abstained from the Zenon vote. Present were Groner, Young, Brenda Benjamin, Donald Francois, Noel Loftus and newly nominated member Alicia Barnes.
