From actively searching for solar suppliers to exploring less conventional renewable energy options such as wind and biofuel, the V.I. Water and Power Authority has been looking for a way to drastically reduce energy costs for its consumers and took the first step Thursday by signing an agreement with the Vitol Group that would transition the territory from relying on fossil fuel to using propane.
Describing Vitol as one of the "strongest and most credit worthy companies in the United States," Gov. John deJongh Jr. said at the official signing ceremony on St. Thomas that WAPA’s switch to propane is not only a major change for the authority, but for the entire community.
WAPA’s governing board voted unanimously to move ahead with the agreement during a meeting held at Government House just a few hours before the signing.
"This will move us from a dependence on fossil fuel, it will ease prices for consumers by 30 percent with a 20 percent improvement in emissions," deJongh said during Thursday’s ceremony. "It forms a partnership with one of the strongest … companies in the United States, which is not only willing to supply us, but believes in us, which is evidenced by the mere signing of a long-term arrangement that will help us make this transition."
A leading energy trader with more than 30 offices worldwide, Vitol is financing all upfront capital costs associated with the project – including the construction of infrastructure necessary to deliver, receive and store the propane, and the conversion of WAPA’s turbines by General Electric to burn both propane and diesel fuel. 
According to WAPA Executive Director Hugo Hodge Jr., the authority will only begin paying in 2014, once the propane is delivered. At that point, WAPA will be metered and will be charged for whatever fuel is used to make power, Hodge explained during the ceremony Thursday.
The capital cost of new facilities on St. Thomas and St. Croix will be amortized over seven years – with an option for complete repayment by WAPA after five years.
"We’ll pay monthly for operations, maintenance and supply of fuel," Hodge said. "But the capital, infrastructure, storage – all of that collectively is 30 percent less than the purchase of fuel oil right now – and at the end of the seven years of this agreement, Vitol will transfer title to WAPA for $1 and the facilities will be ours and we will decide whether we want to maintain it ourselves or contract with them to run it."
Construction is scheduled to begin by the end of 2013, or early 2014, and WAPA expects to transition into using propane as its primary fuel source by the fall of 2014, officials said Thursday.
Hodge said WAPA first began looking at propane as an option after conducting a feasibility study in 2010 that explored the benefits of natural gas.
"After that, we started really studying the possibilities, seeing what we could do, how we could bring this to fruition, what kind of savings the customers could see, what the environmental benefits were, what the benefits were in terms of maintenance of the facility, the units, what the efficiency improvements were – and all of that came with a resounding ‘Yes, this is the way to go,’" Hodge said.
The initial 30 percent reduction in fuel costs anticipated by the authority amounts to a decrease of approximately $90 million annually, he added.
Hodge also said that while propane is widely used by residents every day, the authority has taken extra steps to make sure that the new facilities will be safe, including bunkering, encasing and covering storage tanks so that they are completely covered and hidden from public view.
An independent third-party will also be engaged to do a full assessment of the facilities, once complete, and make any additional safety recommendations, Hodge said. Meanwhile, local first responder agencies, such as Fire Services and the V.I. Territorial Emergency Management Agency have also been working with WAPA to become more familiar with the project and what it entails.
WAPA spokeswoman Cassandra Dunn said after the ceremony Thursday that the authority and Vitol will now move on to the front end engineering design, or FEED, which is basic engineering that comes after the completion of a conceptual design or feasibility study. The FEED will determine whether WAPA needs Senate approval on any Coastal Zone Management permits, Dunn explained.
According to a WAPA news release, the authority plans to meet with community members and other stakeholders in the coming months. The meetings are intended to educate the public more about the project and will also give authority officials the chance to receive feedback and answer questions from customers.
Residents can also learn more about the project by visiting www.poweringvi.vi, or following PoweringVI on Facebook.
