In preparation for the completion of the territory’s long-awaited propane energy conversion this summer, the board of the V.I. Water and Power Authority decided Monday to negotiate an extension of its existing fuel oil supply contract that does away with any minimum monthly purchase obligations.
The decision was made at a special board meeting at WAPA’s administrative offices that lasted less than 10 minutes.
Interim Executive Director Julio Rhymer said that to enter into a contract extension for the supply of No. 2 fuel oil that sets a minimum purchase obligation would be “imprudent,” given the authority’s uncertain needs after its facilities begin running on propane.
Rhymer said he expects that to be the case in both districts by July.
Numerous deadlines for WAPA’s propane conversion have slipped since the project began in 2013, but one of the last issues causing a delay, the receipt of the project’s final Army Corps of Engineers permit, was resolved in January.
St. Croix began receiving shipments of propane last October.
“At this point we don’t have a good handle on how much fuel oil we’ll actually need after the conversion,” said Rhymer, emphasizing that WAPA will still likely purchase some amount of oil after July as a back-up source of energy.
Commodities trader Glencore Ltd.’s oil supply contract with WAPA expires at the end of March. WAPA asked to extend the contract by three months, to the end of fiscal year 2016, but found that the company required a monthly purchase obligation of at least 70,000 barrels for an extension of that length.
Other companies approached by WAPA had similar requirements for short term contracts, Rhymer said.
In order to excuse WAPA from its minimum monthly purchase obligation, Glencore told WAPA it must extend its contract until June 30, 2017.
An authorization of such an extension, which will have “to the extent possible, similar terms and conditions, including pricing, to the current contract,” passed the board unanimously.
Voting in person or via teleconference were board members Juanita R. Young, Cheryl Boynes-Jackson, Gerald Groner, Noel Loftus, Elizabeth A. Armstrong, Public Works Commissioner Gustav James, and Commissioner of Licensing and Consumer Affairs Devin Carrington. IRB Director Marvin Pickering was excused from the meeting.
