Senators Pounce on WAPA Credit Card Use, Contract Overruns

WAPA officials are sworn in Tuesday to testify before the USVI Senate, meeting as a committee of the whole. (Photo by Barry Leerdam for the V.I. Legislature)

Lawrence J. Kupfer, executive director of the Water and Power Authority, came to the Senate Committee of the Whole Tuesday to show a plan to transform the authority. But senators were concerned the plan was nothing but promises, and that WAPA had a history of breaking promises.

One broken promise on the senators’ minds was the promise of reducing rates by 30 percent when the conversion was made from diesel fuel to propane fuel.

Sen. Kurt Vialet pointed out that such a reduction would have brought kilowatt-hour rate down to 36 cents, but it remains at 42 cents.

The propane conversion project’s cost overruns also concerned senators.

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Sen. Janelle Sarauw called the overruns “exorbitant.” Vialet said the overruns almost equaled the initial projected cost of the project. The project was sold to residents as costing $87 million, but in the end, it cost $160 million. Vialet asked, “What went wrong?”

Kupfer defended the overruns, saying they resulted from rushing the project to get savings to residents as soon as possible. However, the project missed deadline after deadline.

Sarauw also called the interest rate for repayment of the loan to VITOL, the company that built the infrastructure for the conversion, “total insanity.” It is 15 percent.

Another project not getting online as promised was a system providing automated meter readings that would do away with estimated bills. Residents have complained for years about estimated bills that some say overcharge them.

Sen. Athneil Thomas said senators were told in March that the project would be completed in June. And now he was being told it was only 80 percent finished. WAPA officials said it was 87 percent complete back in the spring, but a lightning strike to some equipment set the project back.

Senators were also concerned about funds specified in rate change requests as needed for certain projects were not then used for those projects.

Sen. Donna Frett-Gregory said the practice was unacceptable.

The hearing got contentious at times. Sens. Oakland Benta and Kenneth Gittens indicated they thought some of WAPA’s leadership team should be fired. Benta said about the hearing, “We are being jerked around by the people sitting at the table.” There were accusations that “lucrative” contracts were given to friends and that contractors doing business with WAPA did not have business licenses to operate in the Virgin Islands.

Gittens added up the salaries for 17 of the people in top tier positions at the authority and said it came to over $2 million. He said to the testifiers, “To sit here and say the only solution is to raise rates, maybe the only solution is for you to go home.”

Near the end of the 11-hour hearing, Frett-Gregory said, “We are leaving here with a lot of unanswered questions.”

Kupfer in his testimony said, “ I would be remiss if I did not say that we are disappointed that the Legislature found it necessary to issue subpoenas to compel the authority’s appearance, as we have always cooperated each and every time that we are asked to appear and present testimony.”

Senate President Novelle Francis Jr. tried to hold back discussion on the subpoenas, saying they should not be a focus of the hearing, but several senators said WAPA was not always responsive to senators’ request.

Gittens said the Senates’ document request resulted in “a document dump” on the day of the hearing.

Kupfer’s testimony was 33 pages long. It concluded with what he called WAPA’s Transformation Plan.

He divided the plan into three elements – Improved Resiliency, Greater Renewable Penetration and Improved Generation.

The first component includes $400 million for underground circuits for 50 percent of the utility’s customers. The second includes an application to obtain funding for the installation of 28 megawatts of utility-owned solar, along with a large battery energy storage system, for St Croix. In the third component the authority has commissioned 21 megawatts of new owned generation on St. Thomas and 20 megawatts of new leased generation on St. Croix.

“WAPA’s electrical generation has been upgraded as promised,” Kupfer said.

In the final hour of the hearing, Vialet questioned why the agency needed 12 credit cards that had a limit of $100,000. Frett-Gregory said a 2011 Inspector General Report showed that WAPA credit cards had sometimes been used for personal purchases. She wondered why no corrective measures had been taken.

Attending the hearing were Sens. Alicia Barnes. Marvin Blyden, Allison DeGazon, Dwayne DeGraff, Francis, Frett-Gregory, Benta, Stedmann Hodge Jr., Gittens, Myron Jackson, Javan James, Steven Payne Sr., Sarauw, Thomas and Vialet.

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