The government agencies that testified at Wednesday’s Senate hearing about their financial crises said their revenues, including government allotments, were not sufficient to pay their bills — even their electric bills.
The Budget, Appropriations and Finance Committee’s hearing about the current financial crisis of the V.I. Water and Power Authority follows numerous power outages in the Virgin Islands over the last few weeks. Although a rotating schedule of outages was available, most of the blackouts didn’t follow the feeder schedule.
Luis Sylvester, deputy executive director of the V.I. Waste Management Authority, said the agency will be seeking fees and allotments from the Public Services Commission to cover solid waste disposal and trash collection fees “to develop appropriate funding.” Sylvester said WAPA had not been paid for 29 months — the bills averaging around $220,000 monthly. He said they weren’t paid “because the agency is still underfunded by nearly $10 million. WMA expenses are $53.1 million but the government allotment is $40.5 million.”
Schneider Regional Medical Center currently owes $2.8 million to WAPA. Chief Executive Officer Tina Comissiong said the V.I. Health Department should be contributing around $262,880 towards the hospital’s WAPA bill. The average bill is $379,000 a month and $275,000 is deducted from the GVI monthly allotment for SRMC to pay the authority. Other government agencies that owe the medical center $5.6 million include the Bureau of Corrections, the Labor Department, the Health Department, and the Human Services Department. The St. Thomas facility needs $41 million from the government to best serve the community, Comissiong said. According to law, the territory’s hospitals must treat everyone who seeks medical help, whether or not they can pay.
Doug Koch, Juan F. Luis Hospital CEO, said financial struggles and inadequate revenue over several years have made paying the full amount to WAPA nearly impossible. The hospital’s utility bill is an average of $333,000 monthly — about 10 percent of the government allotment to JFL. With the addition of JFL North, utilities are expected to skyrocket. JFL’s annual budget is $88 million and the GVI allotment is more than $30 million. He would like an allotment of $40 million due to high uncompensated care expenses.
WAPA itself can’t keep up with its financial obligations. Andrew Smith, chief executive officer, told senators the financial crisis has been precipitated by the cost of propane transportation, non-payment by WAPA’s largest customer (GVI) and shielding customers from high cost of electricity.
Fuel accounts for 80 percent of the authority’s expenses. The fuel bill is approximately $16-$18 million and the transportation of propane has risen $2.3 million a month recently, according to Smith. Vitol delivers fuel to St. Thomas that delivers fuel to St. Croix.
The V.I. government payments account for up to 25 percent of WAPA’s revenue. Government payments declined in June 2023 and now the past due amount is 24.2 percent, as of February, according to Smith.
WAPA charges residents 41 cents per kilowatt hour, to keep the rates low, compared to other areas. WAPA’s cost to produce electricity is 55 cents. Until June 2023, the GVI helped with the cost of fuel but now WAPA absorbs the higher costs alone, Smith said.
“If WAPA passed on its true cost through to its customers, the average customer would pay approximately $750 more per year for electricity,” Smith said. “We spend more on each customer than they pay.”
Smith said the recent power outages were due to a lack of cash, beginning in the second half of last year. WAPA has deferred vendor payments to make payments for operations. Last week, bad weather and delayed payment prevented a barge carrying diesel from leaving Puerto Rico on time. The vessel didn’t set sail for St. Thomas until the weather improved. The scheduled outages were to prevent longer blackout periods, said the CEO.
On St. Croix, the outages were caused by one of the generators rented by Aggreko, which was taken offline due to non-payment by WAPA. That rented generator accounts for about 50 percent of power on the island. Additionally, Unit 20, one of WAPA’s four generators, required maintenance and is out of service. After a call from the V.I. government, Aggreko powered up service on Friday, April 19.
According to Smith, two initiatives are being planned to save the authority about $5 million per month and stabilize it financially. One is acquiring the propane supply infrastructure from Vitol. A grant application has been with HUD since June 2023, he said.
The outages on St. Thomas were caused by the shutdown of the Wartsila project, funded by HUD. The project was almost completed but Wartsila demanded $15 million for change orders. WAPA is negotiating with Wartsila to restart the project.
“However, grant funding keeps getting delayed despite efforts by the authority to advance the process,” Smith said of WAPA’s plan.
A back-and-forth between Smith and Sen. Ray Fonseca itemized how much money it would take to make WAPA well. Fonseca itemized expenses of $330 million, but the CEO reduced the estimate to $209 million.
Frett-Gregory advised senators and testifiers that WAPA needs to succeed. For one thing, the territory can’t attract new businesses unless owners know they are coming to reliable utilities, hospitals, and schools.
Senators had questions and statements about how the authority descended into its current condition and how WAPA can be brought into financial solvency. On Thursday, there will be another hearing to deal with the local state of emergency declared by Gov. Albert Bryan Jr. on Monday.
Wednesday’s hearing came in the wake of the press conference Monday when Bryan declared the state of emergency to tap into funding that he said would help cover WMA’s and the hospitals’ outstanding utility bills, along with a $2.3 million payment to Aggreko, from whom WAPA’s leases a set of generators on St. Croix.
Before the committee adjourned, Sen. Dwayne DeGraff made a motion to hold another hearing and call testifiers from the V.I. Territorial Emergency Management Agency, the Office of Management and Budget and the V.I. Finance Department, which didn’t show up for Wednesday’s hearing.
Senators present at the emergency meeting included Donna A. Frett-Gregory, Kenneth L. Gittens, Carla J. Joseph, Novelle E. Francis Jr., Marvin A. Blyden, Dwayne M. DeGraff, Ray Fonseca, Javan E. James Sr., Angel Bolques, Franklin Johnson, Marice C. James, Milton E. Potter, and Samuel Carrión.
