CWT AND WAPA LOCK HORNS AT PSC MEETING

March 19, 2002 – The Water and Power Authority and Caribe Waste Technologies Inc. locked horns once again Monday in a Public Services Commission hearing to determine whether CWT is a "qualified facility" for small power production.
Scheduled to continue Tuesday, the relatively fast-paced and orderly hearing wound up about 4 p.m. Monday.
Hearing examiner Rosalie Ballentine told the attorneys to present their closing arguments in writing. She said that after reviewing them she will make a recommendation to the PSC, probably before its April meeting. Should the commission decide in CWT's favor, it could direct WAPA to buy power from the company, which WAPA's attorney, Samuel H. Hall Jr., on Monday called a "hypothetical" entity.
"It doesn't exist," Hall said. "It has no facilities, no site, no permits from the EPA or DPNR [Environmental Protection Agency and Planning or Natural Resources Department], and no time frame for constructing and operating its facilities." Hall called CWT's petition for certification "premature."
CWT's attorney, Adriane J. Dudley, said the issue was a matter of "semantics."
Dudley said the definition of a "small power producer," for which CWT must qualify, is that it produce less than 30 megawatts of power not using fossil — oil or coal — fuel. "CWT meets the requirements set forth in the V.I. Code and the PSC rules," she said.
At issue is whether the company must already be operating in order to qualify for certification. WAPA contends that the PSC rules state small power producers must be in existence at the time of a bid for certification. Small power producers, the authority says, are not asked to state when their facilities began or will begin, because they are expected to be in existence at the time their application is filed.
Dudley disagreed. She interprets the PSC rules to allow for a proposed operation.
CWT was selected by the Turnbull administration last year to build and operate a plant on St. Croix to process all of the territory's solid waste. The proposal called for WAPA to buy electricity from CWT that the company says will be a byproduct of the plant's gasification process.
At its November meeting, the WAPA board of trustees voted down the deal, siding with its executive director, Joseph Thomas Jr., who contends that the technologies the plant would use are unproven commercially and that WAPA is able to meet consumer demands on its own.
CWT petitioned the PSC late last year to review the matter. The commission named attorney Rosalie Simmonds Ballentine, a former V.I. attorney general, as the hearing examiner for the case.
Francis. C. Campbell, CWT president, was grilled by Hall in the morning session about the company's technology, environmental standards and financing. Responding to Hall's questions, Campbell said there is no ThermoSelect process (the Swiss gasification process CWT plans to use in the V.I.) currently in operation anywhere. Plants in Europe and Japan are using a similar process, Campbell said, but not with the same Jenbacher engines proposed for the V.I. facility.
However, Campbell said of his project, "If we are willing to invest millions, that should suggest that the plant is sound. It's $180 million to build this project." He emphasized, "We would have to demonstrate to the bond market that we deserve sufficient guarantees that the method is proven."
Hall asked Campbell about insurance. Campbell said there are insurance bonds "pledged to the V.I. government." Thomas said later that they are not pledged to WAPA, and "that is the problem."
The afternoon session brought out major environmental concerns. Michael Lukey, vice president of Pacific Environmental Services and a consultant to WAPA for more than 18 years, said it can take years for a company to get permits needed to start work on a plant. "Typically, waste-to-energy projects require six to seven years to develop because of the air permit that is needed prior to … any on-site construction," he said.
Lukey said it is "vitally important that the CWT project not create any real or potential problems with future air permitting at any WAPA facilities." He said WAPA could be held responsible for correcting any potential violations by CWT.
Campbell said CWT would use "about 2 percent propane gas in its process." Hall took issue with that statement, say the figure had changed in CWT testimony.
PSC rules state that a small power producer may use no more than 25 percent fossil fuel. Dudley said CWT would not be using anywhere near that proportion.
James Galambas, an executive engineer with the consulting firm of Skadden Arps, repeated what he had said at several WAPA board meetings last year: that "the process is not commercially proven." There are two ThermoSelect facilities in operation, he said, one in Germany and the other in Japan, but neither uses internal combustion engine-driven generators to produce electricity, as is proposed for the St. Croix plant. He said there are no Jenbacher 20-cylinder engines, such as CWT proposes for the V.I. plant, using the synthesis gas.
Ballentine had questions throughout the day. She asked about the locations Campbell had said the government has identified as potential sites for the CWT plant. She asked the zoning status of the properties, which Campbell said he didn't know. She questioned the use of propane gas and asked how CWT would deal with power outages. Campbell said CWT would guarantee "at least 8,000 hours a year" and said the company would have sufficient redundant systems in place to prevent any adverse effects from outages.
Thomas testified that WAPA's bond counsel is "very nervous about this deal." He repeated Hall's earlier statement that the technology is premature and therefore CWT's petition is premature. "We don't understand all CWT's problems," Thomas said, "and they can't all be solved with a contract."
He cited the lengthy permitting process as another obstacle, saying this could interfere with WAPA's current projects. And he concluded, "I have no intention of signing anything that violates my fiduciary responsibility."
Should the PSC certify CTW as a small power provider, the administration's contract with the company would need to be ratified by the Legislature. It would probably go to the Senate Committee on Environmental Protection, which Sen. Donald "Duck" Cole, a non-voting member of the PSC, chairs.
Cole attended Monday's hearing, as did Louis D. Flori and Lynn Severino, Dudley's associates at Dudley Clark & Chan; Kathy Smith, WAPA counsel; and Patricia O 'Reilly, legal analyst for the other non-voting PSC member, Sen. Emmett Hansen II.

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