The proposed privatization of the Water And Power Authority may have caused a rift in the Turnbull-James administration.
In his State of the Territory address last week, Gov. Charles Turnbull expressed tentative support for the sale of WAPA to Southern Energy Inc.
If a sale can secure lower rates for customers, provide a greater return on the government’s investment and include protections for the utility’s existing workers, Turnbull said, he was "increasingly confident that a fair deal for both the government and Southern Energy can be struck…"
A day after that address, however, his second-in-command, Lt. Gov. Gerard Luz James II, expressed opposition to the sale, although he said the utility needs restructuring "from the management down."
James said he and Turnbull ran on a platform "strictly opposed" to the sale of WAPA. On that basis, he said, the voting public should decide the utility’s fate in a public referendum.
"While I understand the governor’s objectives in considering the possible partnership," James said, "I think the people of the Virgin Islands should have a say, and this can only be accomplished through a referendum."
If there is a fissure in the Turnbull-James team over the issue, it is far from the gaping chasm that divided administration of Gov. Roy Schneider and Lt. Gov. Kenneth Mapp. James said that, given his position on the WAPA sale, he and the governor work well together.
A referendum, he said, is a way for the issue to be decided without the two officials getting into one-upping each other.
James said he hoped the governor "would see it that way," too. As to their working relationship, "We are still where we were when we started," the lieutenant governor said.
There is speculation that the adminstration will sell a majority interest of WAPA to help meet the government’s bloated payroll until cost-cutting measures take effect later this year. While details of the Southern Energy deal have not been released, there are reports that the company would purchase 80 percent of the utility for between $80 million and more than $100 million.
Southern Energy, the nation’s largest supplier of electricity, is proposing that WAPA be reorganized into two separate companies. The government would retain 20 percent of the utility, particularly the electrical system’s transmission and distribution equipment. Keeping those systems within government ownership would make them eligible for Federal Emergency Management Agency funding in the event of a natural disaster.
A new company, co-owned by Southern and the government, would operate 80 percent of the utility’s electricity plants, water purification plants and water distribution systems. Electricity would be provided through the government-owned distribution system according to a lease agreement.
In his address, Turnbull said he was not considering the sale simply to help bail out the government. Rather, he said, if restructuring can provide better and more reliable service at lower rates, then the goverment had an "obligation" to consider Southern Energy’s offer.
"Under the proposal being reviewed, the public and social interests would be secured not through government or bureaucratic ownership, but instead through government regulation of private activity pursuant to a reinvigorated Public Services Commission," the governor said.
Schneider twice floated attempts to sell part of WAPA for approximately $30 million to $40 million. Those efforts, however, were aimed more at increasing revenues to balance his budgets than to improve the utility’s delivery of services.
James conceded that the government’s financial situation could influence a decision to sell the utility. But he said the governor had made it clear to him that at this point nothing regarding the possible sale is cast in stone.
Privatization would have "far-reaching impacts on our community," James said. "The governor hasn’t made any determination. He has assured me that he’ll look at it in an objective manner."
