With the problems continuing to pile up, and a lack of money to solve them, the V.I. Water and Power Authority board held a press conference Tuesday to put all their cards on the table for the public.
The first issue: water rationing on St. Thomas.
WAPA’s Executive Director Hugo Hodge Jr. said this problem has been caused by a “failure in all of our mechanisms providing water.” Hodge said the power company is cognizant of the effect the rationing has been having on the public, and laid out the plan for getting things back up and running.
WAPA has gotten its heat recovery boiler back up, allowing the power company to bring two of its water plants back online, said Hodge. This has sustained distribution in the morning and evening hours.
WAPA crews found a few leaks on the boiler for Unit 11 Tuesday morning, which they were working on repairing, and Hodge said he hopes to have all four units on by midnight Wednesday.
The rationing will continue Wednesday, but should be stopped for Thanksgiving Day. Hodge said that after that, rationing will pick back up Friday in the morning and evening for about another week, as the authority works to get water levels back to normal.
WAPA has moved forward with a project to bring reverse osmosis to the territory, which would alleviate the need for steam at the water plants and keep this from happening again, Hodge added. Reverse osmosis would also use less energy, board members said.
Aside from the major issue of water, WAPA board member Gerald Groner proceeded to discuss WAPA’s top six challenges, starting with oil.
Groner said the territory is unique in that it is 100 percent dependent on fossil fuel, while power companies in the states uses a mix of energy sources in which oil is only 1 percent.
WAPA has been searching for multiple ways to diversify its energy portfolio, including a past agreement with Alpine Energy Group for waste to energy plants that failed to get approved by the Senate.
The agreement with Alpine was signed four years ago for a 16 megawatt facility on St. Croix, but the Senate failed to act. It would take between two to three years to bring a plant to St. Croix, board members said.
In addition, WAPA is looking to install master meters to detect breaks and leaks that would reduce line loss expenses, and is also pursuing federal grants to replace aging lines.
WAPA is also working on an interconnection with Puerto Rico that will bring cleaner, cheaper energy and connect the territory to other islands, such as Nevis, which is looking at a geothermal energy source.
Most recently, WAPA sent out a request for proposals for companies to provide 10 megawatts of solar energy to the territory, and has shortened the list of bidders to six. The authority hopes to have a 20 year power purchase agreement with the winning company: all solar panels could be operational by 2013.
Groner said that other issues facing WAPA are: the size of the territory and its limited resources; utility pace; WAPA regulations; public trust/education and cash flow.
The utility is currently owed more than $30 million from the government, with the two biggest bills coming from street lighting and the territory’s two hospitals.
Groner said that the Gov. Juan F. Luis Hospital on St. Croix has since promised to stay current on their bills, but still owes $5 million, while the street lighting program is funded by property tax money that Groner said, at best, comes annually and does not cover the bill.
To get around the cash flow issues, WAPA has put off maintenance and repairs, which has made the plant less efficient, as well as putting off payments to vendors such as Hovensa.
Money is borrowed for big investments, but Groner said that when the authority is in dire financial straits its credit ratings drop and the interest on its bonds go up.
“And when we don’t pay our vendors on time, they stop extending us credit, and start wanting us to pay cash up front, which of course we can’t do because we have a cash flow problem,” Groner said. “This can lead to a crisis.”
When WAPA fell behind by $40 million in its payments to Hovensa a few years ago, the central government stepped in and helped the utility get a loan after Hovensa began asking for cash up front for deliveries.
At this point, WAPA owes Hovensa $30 million, and board members said that while they are working with the governor and Hovensa to see what can be done, there is no way for the authority to handle cash up front the second time around.
“We are seriously behind in our payments to Hovensa once again,” Groner said. “They are working with us now, but I don’t know how long they will or they can, and frankly, I doubt the central government can bail us out again.”
Hodge said the authority keeps between 9 and 11 days of fuel supply on hand in case of a crisis, and also explained that territory wide black outs would not begin immediately if Hovensa begins asking for cash. He said the agreement in the past is that WAPA would have to pay in advance for fuel before it is delivered, but had some time to pay its back bills.
“It’s already up to $30 million, so Hovensa is working with us, but the best thing to do is address the problem,” WAPA board chairwoman Juanita Young said.
Young said the board met with Gov. John deJongh Jr. as recently as Tuesday night to discuss possible sources of revenue. In the meantime, WAPA has cut back on a number of expenses, including: reducing its spinning reserve and staffing levels (only 8 percent of its 100 vacancies are funded), implementing a strict policy on vehicle use, cutting travel and training costs, and increasing video conferences to cut down on travel.
