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HomeNewsArchives'Not Doom and Gloom' – WAPA Explores Fuel Options

'Not Doom and Gloom' – WAPA Explores Fuel Options

The V.I. Water and Power Authority is looking at all its options to continue providing electricity at the most reasonable price possible to the territory’s residents, said Executive Director Hugo Hodge on Wednesday in the wake of news that the Hovensa refinery on St. Croix would be shut down.

"It’s not all doom and gloom," Hodge said in a phone interview from Washington, D.C.

The utility was already developing a contingency plan based on recent business-journal reports that the refinery’s owners were considering the shutdown, Hodge said. WAPA has been looking at all its options for acquiring fuel on a suddenly wide open market.

"We will come up with the best solution for meeting the needs of the people of the territory," he said.

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While Hodge said the current contract with Hovensa runs through June, it is not yet clear how the closure will affect future prices.

WAPA buys fuel from the refinery at a discount, essentially paying the rate for the crude oil delivered on-island, and not the cost of refining it, Hodge said, which works out to a savings of $2 million to $3 million a month. How that price will change when the oil is no longer refined on the island was not clear Wednesday morning.

Prices are set under an agreement called the third extension agreement, which runs through the year 2023, Hodge said. The agreement is technically between the oil company and the government of the Virgin Islands, not WAPA, so Hovensa has not been in touch with the utility directly, he said.

While those talks go on, he added, WAPA officials will look at the availability of suitable fuel from other sources, along with continuing to pursue alternative energy such as the Alpine waste-to-energy project and renewable energy.

In fact, Hodge was in D.C. when the Hovensa news was announced, specifically because he was negotiating finalists in WAPA’s solar energy proposals request.

Another issue complicating the search for lower-cost, alternative fuels is the requirement that WAPA burn low-sulfur oil, which is more expensive to produce and purchase.

The federal Environmental Protection Agency requires WAPA to burn oil that is .03 to .05 percent sulfur, which Hodge said is lower than any stateside electrical generating plant. Getting EPA permission to use higher sulfur could make it possible to find greater supplies of fuel at a lower cost.

At separate press conferences today both Governor John deJongh Jr. and Congressional Delegate Donna Christensen talked about approaching the EPA to that end.

Christensen said, "Exploration of cheaper fuels for WAPA and development of renewal energy must now be put on a fast track."

She also suggested exploring whether Hovensa’s power generation capacity can be used to make WAPA’s generation more reliable, helping alleviate the high cost of power.

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The V.I. Water and Power Authority is looking at all its options to continue providing electricity at the most reasonable price possible to the territory's residents, said Executive Director Hugo Hodge on Wednesday in the wake of news that the Hovensa refinery on St. Croix would be shut down.

"It's not all doom and gloom," Hodge said in a phone interview from Washington, D.C.

The utility was already developing a contingency plan based on recent business-journal reports that the refinery's owners were considering the shutdown, Hodge said. WAPA has been looking at all its options for acquiring fuel on a suddenly wide open market.

"We will come up with the best solution for meeting the needs of the people of the territory," he said.

While Hodge said the current contract with Hovensa runs through June, it is not yet clear how the closure will affect future prices.

WAPA buys fuel from the refinery at a discount, essentially paying the rate for the crude oil delivered on-island, and not the cost of refining it, Hodge said, which works out to a savings of $2 million to $3 million a month. How that price will change when the oil is no longer refined on the island was not clear Wednesday morning.

Prices are set under an agreement called the third extension agreement, which runs through the year 2023, Hodge said. The agreement is technically between the oil company and the government of the Virgin Islands, not WAPA, so Hovensa has not been in touch with the utility directly, he said.

While those talks go on, he added, WAPA officials will look at the availability of suitable fuel from other sources, along with continuing to pursue alternative energy such as the Alpine waste-to-energy project and renewable energy.

In fact, Hodge was in D.C. when the Hovensa news was announced, specifically because he was negotiating finalists in WAPA's solar energy proposals request.

Another issue complicating the search for lower-cost, alternative fuels is the requirement that WAPA burn low-sulfur oil, which is more expensive to produce and purchase.

The federal Environmental Protection Agency requires WAPA to burn oil that is .03 to .05 percent sulfur, which Hodge said is lower than any stateside electrical generating plant. Getting EPA permission to use higher sulfur could make it possible to find greater supplies of fuel at a lower cost.

At separate press conferences today both Governor John deJongh Jr. and Congressional Delegate Donna Christensen talked about approaching the EPA to that end.

Christensen said, "Exploration of cheaper fuels for WAPA and development of renewal energy must now be put on a fast track."

She also suggested exploring whether Hovensa's power generation capacity can be used to make WAPA's generation more reliable, helping alleviate the high cost of power.