The V.I. Water and Power Authority has closed a $35 million financing deal, allowing it to make the final payment for the first three Wartsila propane-fired generating engines that have been operating in the Randolph Harley Power Plant on St. Thomas since 2019.
As a result of the final payment for the generators, Wartsila agreed to dismiss its lawsuit against the authority that was pending before the District Court, WAPA announced in a news release early Monday.
The issuance of the 2021 Electric Revenue Bond Anticipation Notes also allows the authority to pay other outstanding amounts owed to Wartsila and to Aggreko for operating and maintenance costs, and to fund the associated debt service reserve funds and the cost of issuance associated with the financing of the notes, the release stated.
WAPA successfully closed the financing deal on Friday, according to the release.
WAPA’s governing board authorized as much as $40 million in bond anticipation notes – funded by fuel tax revenues – to cover the balance and interest owed on the three Wartsila units at its meeting on Oct. 28.
The three units were leased for approximately $33 million with initial payments made from fuel-tax financing, which hit a snag in 2020 after senators proposed the funding source be put toward the Government Employees’ Retirement System instead. While that proposal was not approved, WAPA had finalized the second tranche of funding before hurricanes Irma and Maria hit in 2017, but having to focus on response afterward, then a lawsuit from Wartsila in 2021 and efforts to restructure the authority’s board, made investors wary and delayed the process, WAPA officials have said.
Leftover was about $17 million, which then accrued upwards of four to five million in interest. Of the up to $40 million authorized at the October meeting, approximately $21 million would cover the outstanding balance to Wartsila – including operating and maintenance costs associated with the units – while the remainder will be used for change order costs associated with the installation and rental of leased Aggreko units at the authority’s plant on St. Croix.
The hope, according to board members, is that by the end of five years, the authority can refund the bond anticipation notes and “bond out,” or obtain long-term financing.
Friday’s financing deal comes as the utility begins to install four new generating units that arrived in the territory at the end of November and are being positioned at the Randolph Harley Power Plant. Once installed – a process expected to take until 2023 – the new units should provide more reliable electrical service to the St. Thomas-St. John District, according to WAPA officials.
Interim CEO Noel Hodge touted the arrival of the new generators as “a significant milestone for WAPA as the utility moves to smaller, more efficient and reliable generation.”
The new units are 100 percent federally funded through the Community Development Block Grant – Disaster Recovery Program, with a total cost of $95 million, according to Hodge.
“Neither WAPA nor its customers will have any burden to bear in our bringing these modern units into service,” he said.
