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Charlotte Amalie
Sunday, July 14, 2024


A Hovensa executive on Saturday sought to defuse charges that the company has been raking in profits on fuel oil sales to the Virgin Islands Water and Power Authority—and WAPA has been passing on its costs in the form of recent hikes on consumer energy bills.
Hovensa vice president Alex Moorhead said the company has little or no leeway in its pricing for WAPA, which is set by a formula worked out in an agreement with the V.I. government in 1998.
He said increases in consumers' power bills are due to crude oil prices nearly tripling since January 1999.
In a statement Saturday, Moorhead said the contract requires that Hovensa's price be the lower of two figures:
— the average landed monthly low sulfur crude oil costs per barrel charged to Hovensa, without adding refining costs;
— the average New York Reseller Contract Barges Price for low sulfur No. 2 fuel oil, and the average Estimate New York Contract Cargo Price for low sulfur residual fuel oil, as published in Oil Buyer's Guide, minus $2 per barrel.
Moorhead said Hovensa has had "below market price" agreements with the V.I. government dating back to 1981, when it was still Hess Oil Virgin Islands Corp.
"It has been estimated that this price formula saves WAPA over $9 million per year," he said.
Moorhead pointed to U.S. Department of Energy figures that put the price of crude oil at $29.57 a barrel in June, compared to $10.47 in January 1999.

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