Fact and Reality Check: A Short History of WAPA Part III

In September 2009, after receiving a petition signed by 700 Virgin Island consumers, the Interior Department’s Inspector General’s office got involved in the issue of electrical power in the U.S. Virgin Islands.

The IG’s office produced an eight-page report (DOI-IG 2009 Report on WAPA) that said the Water and Power Authority should implement renewable energy and perform better maintenance on its 26-year-old generating units. However, Interior said WAPA could not do either one, in part because the government didn’t pay its bills on time, thus reducing WAPA’s revenues by as much as $20 million a year.

The other factor in the report said, “WAPA’s maintenance budget has been consistently reduced over the years to offset rising fuel costs and the lack of positive cash flow.”

For example, the report noted that in fiscal year 2009 the authority had set aside $3.9 million for maintenance for St. Thomas-St. John district, but one single part for one of the many generating units needing repair cost more than $4 million.

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“Today” said the report in September 2009, “the Virgin Islands Government owes almost $15 million to WAPA.” The report went on to say, “Without a positive cash flow WAPA has little hope of improving and maintaining the efficiency of its plants.”

The report warned, “Unless the Virgin Islands moves quickly to develop all possible alternative energies and recognizes that updating and maintaining WAPA’s power plants is of the highest priority, power consumers will continue to endure unnecessarily high energy bills.”

If the authority had been successful in diversifying power production, the inspector wrote, much of the hardship could have been avoided.

There is no way of knowing what the power authority could or would have done if it had been free to make its own decisions and choices over the nine years before as reported in Part I and Part II.

The efficiency of WAPA’s power production compared in the Interior report to other national power plants was unfavorable, showing 33 percent efficiency on average nationally, compared to WAPA’s 21 percent on average.

A few pages later the same report states, “One of the challenges facing WAPA … is the fact that its power plants are island-based, with no large power grid or utility interconnections to back up its generating units.”

As for deferred maintenance, the report goes on to say among other things that the maintenance budget was reduced to cover fuel costs as noted above.

“Chronic delinquency on the part of the government in paying their utility bills further compromises WAPA’s ability to perform routine maintenance.”

Meanwhile, almost all the suggestions made by the Interior’s inspector general that were within WAPA’s power to control, were implemented. They were the same as all the other sensible suggestions made by consultants, PSC and more importantly, WAPA personnel and board members.

Those suggestions will be outlined in the conclusion to this history.

Meanwhile, after nearly six years of study, investigations, negotiations and input from government agencies and a volunteer citizens advisory committee, a project that could have met the suggestions made by everyone from the inspector general to the consultants, legislators and nearly everyone else who was paying attention was killed.

Alpine Energy

Alpine Energy President James Beach talks about the trash-to-energy project to a crowd in 2010 at UVI's Great Hall on the St. Croix campus. (Source file photo by John Baur)
Alpine Energy President James Beach talks about the waste-to-energy project to a crowd in 2010 at UVI’s Great Hall on the St. Croix campus. (Source file photo by John Baur)

Along the road of good intentions, the longest-lasting effort that had a chance to lower rates while addressing another serious problem – the need to diminish and eventually close the territory’s landfills which have been under consent decrees for years – also got trashed. But not before WAPA and Alpine Energy had spent nearly six years and millions of dollars on the attempt to bring waste-to-energy technology to the U.S. Virgin Islands.

In 2007, the authority issued a Request for Proposal for the purchase of up to 26 and 35 megawatts of electric energy on St. Croix and St. Thomas, respectively. The primary objectives of the procurement process were to solicit proposals that would reduce the cost of electricity to customers, and decrease the territory’s 100 percent dependence on fuel oil and the associated exposure to volatile oil market prices.

After much consideration by firms and consultants that read like of list of who’s who in the energy and legal fields, on Aug. 10, 2009, the authority’s governing board approved execution of two separate 20-year power purchase agreements and other ancillary agreements for the proposed projects – one for the St. Thomas-St. John District and one for St. Croix.

The details were hammered out, the genuine concerns and objections – including the use of pet coke (a byproduct of oil refining which could be easily and cost effectively obtained from HOVENSA on St. Croix) – were met.

The future looked bright. The genuinely concerned and informed environmental community was satisfied for the most part by the information, changes and concessions made to satisfy the worries about pollution from the pet coke, which Alpine eliminated from their working plan. Other concerns such as odors, emissions and by-products of the generation were also satisfactorily addressed by Alpine and WAPA.

In hindsight, most informed people agree Alpine Energy had become a good deal after all the objections were addressed.

The revised deal was given the seal of approval by one of the most active environmental groups in the territory. Paul Chakroff, then-executive director of the St. Croix Environmental Agency, said at a Senate hearing in 2011 that SEA was firmly behind the Alpine deal after modifications had been made.

“We supported your vote against the lease in 2010,” Chakroff said. As a result of that vote, AEG made major modifications in their proposal, eliminating the use of pet coke, and scaling back the size and location of its power generating plant, he said. With the new plan, “emissions on a routine basis will be very small – way below the permitted level, and secondly, way below other emissions we are already receiving in the territory.”

In the end, however, listening to a small group of unconvinced and mildly hysterical environmentalists who spread fear across the territory, senators killed the deal by refusing to provide a lease on St. Thomas for part of what would have been Alpine’s facilities.

An example of the concern about misinformation coming from those far less qualified to be making decisions about the Virgin Islands’ energy plans, former Sen. Alvin Williams said he objected to “putting smokestacks in Bovoni,” adding the technology has “only been licensed in one state,” and so should be viewed with caution.

However, the reality was that AEG’s plans did not call for a trash burning plant in Bovoni – just a trash processing facility to make fuel for the trash burning plant planned for St. Croix.

During hearings on the lease in December 2011, V.I. Energy Office Director Karl Knight testified there were already 11 waste-to-energy facilities in the United States utilizing refused-derived fuel as a feedstock, using “essentially the same technology,” thus debunking Williams’ claim there was only one.

“The exact technology proposed by the Alpine Energy Group is presently in use on the island of Aruba,” Knight testified at the time.

A Q&A document that covers the questions and Alpine’s responses can be found here. (Alpine’s FAQs)

For those who want to revisit how it would have worked, here is a simple explanation below.

Instead, of the pet coke originally slated to keep the fires burring so to speak, electricity production would have come primarily from municipal waste that would have been converted into odorless, refuse-derived fuel pellets.

V.I. Waste Management Authority had guaranteed Alpine a minimum of 400 tons per day of household solid waste from St. Thomas and St. Croix combined based on its projections for waste disposal in the territory over the ensuing 20 years.

The proposed state-of-the-art steam electric generating plant would have operated as explained in the document from Alpine:

“Step 1: The energy conversion takes place first in the boiler. Fuel is burned in the boiler furnace to generate heat. The fuel is burned in a controlled manner mixing air with fuel in a measured manner to extract as much energy as possible from the fuel. Temperatures of the combustion process for the Alpine project will exceed 1,600 degrees Fahrenheit. The gas produced from combustion is directed through a series of heat exchange components and emission reduction treatments and is exhausted into the atmosphere.

“Step 2: The second step in converting energy is the thermodynamic process. The heat generated by burning fuel is transferred through the metal from which the boiler is constructed into water where it boils to produce steam. In the Alpine project, the steam will be at high pressure and temperature at approximately 850 pounds of pressure per square inch and 830 degree Fahrenheit. The high temperature and pressure steam is directed to and introduced into a steam turbine. The steam works through the turbine at which point it is condensed and pumped back into the boiler to repeat the cycle.

“Step 3: In the third phase of energy conversion, the energy from the steam working through the steam turbine is converted into rotational energy which turns the electric generators producing electricity.”

As incredible as it may sound it was suggested that recycling was a better alternative to the above waste-to-energy generation, which would have lowered costs to rate payers by an estimated $40 million a year and relieved the landfills of 400 tons a day of waste.

This would be a good time to ask – as our power continues to come and go – how successful recycling has been in the years since Alpine was dismissed in that single act of refusing to grant a lease on St. Thomas by senators who allowed what might have been a workable, cost-saving alternative to oil to be drowned out by the amplified voices of a dozen or so, mostly privileged, opinionated people, who could afford to install solar panels on their homes.

Senate Rejects Alpine Lease, Killing Trash-To-Energy Plan

Here’s what Alpine responded at the time to the question of recycling, again from the document obtained by the Source.

“Recycling can and should be a part of the long-term solution. However, 100 percent recycling is not feasible nor does it provide lower cost electric energy.

“The Alpine project promotes recycling by removing nearly all glass and metals from household waste at the initial stage, rather than the current process of sending most of these materials to the Anguilla and Bovoni landfills.

“The glass and metals that are recovered are returned to the Waste Management Authority for sale to third parties, which will both promote recycling and provide a source of revenues for the authority. Given there is no active market for the remaining waste, the best solution for its disposal is combustion. This provides the most environmentally-friendly disposal option with the lowest carbon footprint [versus shipping off-island or landfilling the materials], while also lowering power prices for WAPA.”

Unique Factors
There are factors – several unknown to or ignored by the average WAPA customer – that add up to the current painfully high rates and LEAC charges in addition to those stated previously in this series.

– After Irma and Maria, the authority lost 37 percent of its usual revenues simply because there was no power and therefore no bills;
– Individual and commercial customers who have turned to solar and other means to power their homes and business account for another 10 percent loss of revenues;
– WAPA must maintain four separate power grids;
– As a United State territory, WAPA is held to higher, more costly standards adhering to Environmental Protection Agency regulations.

This is not to suggest that any of these factors make it easier for those of lesser means, or businesses trying to survive. They are simply factors in the quagmire of complicated issues facing WAPA and the community as a whole seven years after Alpine went away.

Editor’s note:  Bill Kossler and Kelsey Nowakowski contributed to this report.

Next: After Alpine

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