The V.I. Water and Power Authority governing board authorized $2.5 million in new spending Monday for emergency turbine repairs during recent extended rolling blackouts on St. Thomas and additional turbine repairs and upgrades needed for both districts.
Meeting via teleconference in both districts, the board authorized reprogramming $600,000 from 2010 electric system bonds for emergency repair of Unit 13 turbine generator on St. Thomas. Of that total, $372,000 goes to Arm Services USA for emergency repairs on-island and $228,000 goes to transport the rotor to the mainland, repair it there, and ship it back.
When unit 23, St. Thomas’ big workhorse generator, went offline June 15 after a car hit a utility pole, two other units were offline being overhauled in advance of hurricane season, leaving the system struggling to meet demand.
Unit 13 also went down at the time, Hodge said Monday, leaving the power system unable to meet demand and forcing rotating outages until the system could be stabilized.
Unit 23 has had problems ever since a major overhaul last year, including a vibration problem and problems adjusting to surges and changes in demand, Hodge said.
Units 11 and 18 are back online, and as soon as unit 13 is back online, too, the system will have the capacity to safely take unit 23 offline for repairs, Hodge said.
"The main thing is to get 23 stable and up to its design output," Hodge said. The work should be done by the end of the year, or shortly after unit 13 is back online, he said.
The board also extended a contract with Wood Group until Dec. 23, to allow it to finish up emergency repairs on other units, then fix unit 23’s ratchet system. Currently, no new funding is needed, but depending upon the cost of repairs, that may change, said WAPA Chief Operating Officer Gregory Rhymer.
For St. Croix’s power plant, the board approved adding $1.3 million to the scope of work needed on St. Croix unit no. 11, to return it to normal operation and get the maximum benefit from the plant’s fuel-saving heat recovery steam generator, unit 24. The new approved maximum cost is now $3 million.
It has been seven years since that unit has had any major maintenance work or repairs, Hodge said. St. Croix Plant Superintendent Kevin Smalls said the maintenance was two years overdue, which likely made the repairs more extensive and expensive.
Board member Gerald Groner pointed to the higher-than-anticipated cost and delayed maintenance as consequences of chronic delayed utility payments from government agencies. Since fuel must be purchased and vendors must be paid, when cash is extremely tight, maintenance regularly gets short shrift because it is possible to postpone it, Groner said.
Getting unit 11 back online promptly is extremely important because it is St. Croix’s big workhorse generator and because it normally feeds the plant’s main heat recovery steam generator, saving a lot of fuel, said Smalls. Having a less powerful turbine feeding the heat recovery generator uses 300-400 more barrels of fuel per day, costing around $40,000 daily, said Smalls.
The board also approved spending $629,000 to replace the control systems for St. Croix turbines nos. 10 and 11. The old controls are obsolete and can no longer be repaired or replaced, while the new ones save labor, work better and will be necessary to add alternative sources of power to the grid and to connect to another grid such as Puerto Rico’s, Hodge said.
In a preview of the utility’s budget hearing before the Senate later this summer, the board approved the WAPA’s projected 2012 operating and capital budgets.
For the electrical system, operating revenue—not counting fuel oil costs reimbursed through the Levelized Energy Adjustment Clause—is projected to be $78.8 million. LEAC is projected to bring in roughly $273.6 million, for total operating revenues of $352.5 million
WAPA’s total operating expenses are projected to be $351.9 million. Overall, the electrical system projects a net loss of $8.7 million for Fiscal Year 2012.
WAPA’s capital budget for the electrical system is $20.4 million. Of that, $12.3 comes from existing 2003, 2007 and 2010 bonds; $3.7 million comes from federal grants and $2.9 million from WAPA’s internal funds.
The electric system senior debt coverage ratio is 2:1. The debt-coverage ratio is, essentially, WAPA’s yearly operating income divided by the total amount of all interest and principal paid on all of its loans. The bigger the number, the better the financial condition of the company, so the more credit worthy it is considered. (A ratio of less than 1 would indicate negative cash flow.)
WAPA’s water system projects total operating revenues of $39.3 million, of which $13 million should be fuel costs reimbursed via the LEAC. Operating expenses are projected to be $39 million. Once other income and federal grants are added to the equation, the water system is projected to have a net income of $6.6 million for 2012.
The water system capital budget is $19.5 million, with $15.5 million in federal grants, $2.1 million from internal funds, $1.7 million in property tax funding.
In other business, the board authorized:
— spending $1.2 million for annual security contracts; $683,000 to Comprehensive Security on St. Thomas and $541,000 to Elite Security on St. Croix;
— spending $391,000 to Electric Supply of Tampa for high voltage supplies for the Cruzan Rum underground service. The project will reduce the impact of strong storms, increase reliability and power quality, and increase revenues;
— implementing a vegetation management policy;
— implementing a record retention and destruction policy. Currently WAPA has no policy.
Board members present were Alicia Barnes, Wayne Biggs, Noel Loftus, Gerald Groner and Karl Knight.
Absent were Brenda Benjamin, Donald Francois and Cheryl Boynes Jackson.
