Senate Committee Hears WAPA Woes

The Committee on Government Affairs, Veterans, Energy and Environmental Protection grilled representatives from some of the territory’s most financially strapped agencies Friday and heard, once again, that in most instances their inability to pay bills is due to low or late allocations from the V.I. government.

More than 10 senators attended the hearing but no one responded to the testifiers’ requests for increased funding.

Administrators from the Schneider Regional Medical Center and Gov. Juan Luis Hospital pointed out that late payments from the government that do not cover the specified costs are overarching reasons for not paying the V.I. Water and Power Authority millions of dollars owed for long periods of time.

Bernard Wheatley, SRMC chief executive officer, said the medical facility tries to pay WAPA as soon as allocations are received, but funds have been six to eight weeks late and the government allocation doesn’t begin to cover the utility bill.

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The allocation is $300,000 a year but the WAPA bill is around $350,000 each month.

At this time, SRMC owes more than $8 million to the authority and has been able to cut or save around $6 million by reducing the number of contracts and part-time, traveling medical staff.

Looking at energy efficiency programs, Wheatley said, Schneider Regional can’t cover the upfront investment for infrastructure and equipment. Further savings can be realized by cutting services and closing the Myra Keating Clinic and the oncology, hemodialysis units are being considered.

“We respectfully request that the Legislature adjust the line-item for utilities that was allotted to SRMC in Fiscal Year 2017 at $300,000 up to $4.2 million in the FY18 appropriation, which is a true reflection of SMRC’s WAPA annual bill and will ensure that SRMC has the funds necessary to cover its WAPA obligations,” Wheatley said.

“Or in the alternate, we respectfully propose the Legislature to consider introducing legislation that discounts this vital community hospital’s WAPA bill.”

Richard Evangelista, acting chief executive officer at JFL, said he “dittos everything” Wheatley said. The St. Croix hospital owes $10 million to WAPA and has paid $136,000 because the government payments have not been received on a regular basis, Evangelista said.

“As soon as the hospital can meet its biweekly payroll in a timely fashion, the hospital will add WAPA to its mandatory monthly costs,” he summarized.

Roger Merit, Jr., executive director of the V.I. Waste Management Authority, gave a very brief statement that the VIWMA owes $414,324 to WAPA and will forward $240,000 by the end of the month. Under questioning, he said he didn’t know when the remainder will be paid.

Julio Rhymer, WAPA chief executive officer, also talked about finances and the recent feud with the Public Services Commission over a rate increase request. Rhymer said the authority sometimes has as little as three days of cash on hand as opposed to the industry standard of 85 days cash flow.

The rate bump was requested to fund equipment, repairs and fuel oil and would increase residential bills by 9 percent and up to 19 percent for large power customers.

The commission approved a base rate increase amounting to $14.5 million in January and rescinded it, “illegally,” two weeks later causing “catastrophic consequences,” Rhymer said.

After the PSC action, WAPA instituted the rate increase on its own and filed a motion with the Superior Court. PSC’s latest action, in a board meeting, was to forward the matter to a hearing examiner with a recommendation expected in May.

Donald “Ducks” Cole, PSC executive director, admitted the $14.5 million interim rate was approved and “rescinded because WAPA, in enforcement of the rate, was in violation of certain conditions attached to the rate.”

In her testimony, Elizabeth Armstrong, WAPA board chairwoman, blamed PSC for a recent downgrade by two rating agencies to which Cole responded, “The PSC has given WAPA everything they want.”

Committee Chairman Sammuel Sanes commented several times on the discord between the agencies and said it “makes us want an audit.” He pointed out public meetings and media reports are monitored by the bond market and can lead to downgrading of bonds issued by WAPA.

“You need to settle this behind closed doors,” Sanes recommended.

Senators questioned Rhymer on the $73 million cost overrun sustained while implementing WAPA’s conversion from fossil fuel to liquid propane gas and how it will affect the utility’s promise to lower consumer rates. The initial cost was estimated at $87 million and was to be paid through a five-year base rate increase. At this time, the cost is expected to run to $180 million.

“Whoever estimated that project did a horrible job. I hope you never use that person again,” Sen. Kurt Vialet said.

Rhymer explained that since the company, Vitol, built the LPG system at the same time they designed it, the final cost could not be forecast accurately. Some of the overrun may be rebated but it is currently being repaid at a rate of more than $2.5 million a month, he said.

Over the long term, the investment will save ratepayers, Rhymer maintained.

Asked by Sen. Brian Smith about a five-year forecast, Rhymer said he anticipates $20 million savings for each district by then, due to more efficient units.

Several senators complained about the process WAPA uses to estimate bills instead of reading meters.

According to Rhymer, an average of the three previous months charges are used to estimate utility bills when the meter is not read physically.

Sen. Kurt Vialet asked why estimates are frequently hundreds of dollars higher than what consumers are used to paying and Sen. Novelle Francis Jr. said the number of customers’ complaints about inaccurate estimates is “outrageous.”

Rhymer refused to write a policy that allows customers to pay their normal rate until the meter is read and the bill is settled, because he said the automated meter infrastructure program will be in place at the end of March throughout the territory insuring accurate charges.

One private citizen also spoke to the committee. Frank J. Taylor complained about his inability to make estimated payments to WAPA because he lives on a fixed income. He said he has never been notified why the bills are being estimated and finally appealed to the PSC and individual senators for help.

There were no votes taken during the session. Attending were Sanes, Frances, Vialet, Smith, Sens. Jean Forde, Alicia “Chucky” Hansen, Nereida “Nellie” Rivera-O’Reilly, Janette Millin Young, Tregenza Roach and Positive Nelson.

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