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Charlotte Amalie
Friday, March 29, 2024
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WHO GAINS FROM WAPA SALE

Dear Source,
Should we sell WAPA? Should we have sold the St. Thomas Municipal Telephone System in 1960?
In 1954 Governor Morris F. DeCastro offered the Saint Thomas Municipal Telephone System to ITT through the local head of All America Cable and Wireless, a subsidiary of ITT.
After all, the head of ITT was born in St. Thomas. The asking price was $100,000, $20,000 down and the balance in $20,000 yearly installments, with no interest charges. ITT was not interested.
In 1960 Gov. John David Merwin concluded that the demands of our growing economy required an improved system which the Virgin Islands government could not finance, therefore the phone system was put out on bid.
ITT became interested and was the highest bidder. Over the 30 odd years that ITT operated the system, $47 million in capital improvements were made. Of course this was not a gift, they recovered their investment, with interest, through depreciation. This depreciation was made up by what the subscribers paid for the service. So, the Virgin Island users paid for the $47 million invested in their phone system through monthly billings from the phone company.
ITT sold the system for $97 million. Now the Virgin Islanders are investing this amount, plus interest, into the present system. ITT declared Capital Gains on the sale.
Did the Virgin Island Government receive the capital gains tax that was paid?
Now who owns WAPA? The electricity users are the owners.
My electric cost works out to about 12.5 cents per kilowatt hour. The 1995 U.S. Government national cost was reported at 8.67 cents per kWh. We cannot expect stateside prices here since over there electricity is generated by hydroelectric, atomic, mechanical and wind power. (Denmark generates about 7% of their power with windmills.)
Now let's say the sale of WAPA goes through for $100 million.
The V.I. Government will go through this in no time, but the new part owners will recover their investment with depreciation, and it will come from what we pay for electricity. In other words, the users will have to cough up $100 million, which the V.I. Government gets without raising taxes. We'll be jumping out of the frying pan into the fire.

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