The governing board of the Virgin Islands Water and Power Authority on Friday authorized negotiations for a new liquefied petroleum gas supply contract and approved several infrastructure and financial oversight actions.
The board voted 5–0, with one member absent, to allow Executive Director Karl Knight to negotiate a two-year LPG contract with an option for a third year, following a second round of competitive bidding that produced lower prices and more flexible payment terms than WAPA’s expiring agreement at 59 cents per gallon.
Director of Project Management Maxwell George told the board that Empire Gas submitted the lowest bid at about 47.49 cents per gallon, roughly 11.5 cents below the current rate, but required WAPA to prepay for shipments, a condition officials said could strain cash flow and jeopardize fuel deliveries.
Carib LPG Trading Ltd offered the second-lowest price at 48.5 cents per gallon, or about 10.5 cents below the existing contract. Although slightly higher than Empire’s bid, Carib’s proposal includes a credit facility equivalent to roughly one shipment, estimated at about $3 million, along with hurricane-readiness measures, diversified supply options and a detailed corporate social responsibility plan.
“Carib also was very responsive to our corporate social responsibility,” George said, describing plans for “educational outreach in the local schools and with the authority through workshops, local charities and community based grant programs.”
Authority officials said both Carib and Empire’s proposals would generate substantial savings compared with the expiring contract. Based on typical shipment volumes of about 180,000 barrels per month, staff estimated annual savings of roughly $10 million under Empire’s rate and about $9.5 million under Carib’s.
George said the price difference was outweighed by the risk that prepayment terms could leave the utility unable to accept fuel when it is most needed. Knight said the credit facility included in Carib’s proposal is intended to prevent a repeat of recent episodes in which fuel ships arrived while WAPA was still scrambling to assemble cash.
“We think we have found a reasonable compromise,” Knight said, adding that past payment delays had forced the utility to ration fuel and triggered what he described as a “financial state of emergency.”
He said near-term savings will be used to reduce a cash deficit in the current budget and stabilize operations before any discussion of rate relief.
“I think we are now positioning ourselves … to have realized conversations about what our expenses look like,” Knight said, adding that he is “optimistic that 2026 looks favorable” as a time to begin earnest discussions with the Public Services Commission.
Chief Financial Officer Lorraine Kelly told the board that WAPA is still carrying approximately $160 million in deferred fuel costs — expenses not fully recovered through customer rates. Under a compromise with the PSC, she said, “when we get to June 30 of 2026 we will no longer have the benefit of carrying those costs,” and expects “something in the magnitude of about $120 million yet to be finalized and yet to be determined, will be written off at that time.” A new deferred fuel accounting track began July 1 of this fiscal year.
The board also approved a major cost reduction for the Christiansted’s Queen Street underground electrical project in Christiansted, St. Croix. The Feeder 1 upgrade, originally approved at about $7.63 million on a 75–25 federal-local cost share, was scaled back to roughly $4.83 million after rising construction costs caused FEMA to cap its contribution at the original award level. Staff said value-engineering changes — including the removal of some secondary ducts, manholes, street-lighting work, and certain testing requirements — will preserve the main underground feeder along Queen Street while restoring FEMA’s 75 percent share and reducing contractor retainage from 10 percent to 3 percent.
Knight also reported progress on disaster-recovery efforts, saying Kiewit has begun work on a “Northwest horizontal bundle” on St. Croix that combines water, underground electrical, telecommunications, and wastewater projects. He added that the Public Finance Authority has approved engaging RG Engineering to lead the prudent replacement of generation units at the Richmond plant on St. Croix and the Randolph Harley plant on St. Thomas, with contract negotiations to be handled through the Office of Disaster Recovery.
In an operations update, Knight briefed the board on a recent transformer failure and fire at the Richmond plant that contributed to a prolonged outage on St. Croix. Chief Operating Officer for Electric Systems Lower Lavender said a grounding transformer on the Aggreko side of the interconnection “was not included within the protection zone,” allowing a fault to persist until station-service systems tripped and the plant went dark. Crews have since relocated the grounding connection and tested protections.
To strengthen financial oversight, the board extended its contract with accounting firm BDO to complete required single audits and financial statement audits for fiscal years 2021 and 2022, triggered by WAPA’s receipt of $750,000 in federal funds. The amendment extends the completion date to July 30, 2026 and raises the contract’s not-to-exceed amount to $740,000, which Kelly said is expected to be covered entirely by FEMA management-cost funding.
The meeting concluded with recognition of outgoing employees including board member Juanita R. Young, who is stepping down after 18 years of service. Young said the experience gave her “an immense appreciation” for the work.
