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WAPA Holds the Line on Debt

Dec. 16, 2004 — The V.I. Water and Power Authority has managed not to sink further in debt, thanks to its ability to automatically adjust rates based on the fluctuations in the oil market.
In June, Hovensa had threatened pull the plug on WAPA because the utility owed $4 million in delinquent fuel costs. WAPA had to take a loan to pay Hovensa the amount owed. (See "WAPA Borrows to Pay What It Owed Hovensa").
The Public Services Commission in its August meeting had granted WAPA the authority to adjust its levelized energy adjustment clause (LEAC) factor every time the price of oil went $1.75 above or below the set rate.
"The introduction of the automatic LEAC has allowed the authority to keep current on its account with Hovensa," WAPA Chief Financial Officer Nellon Bowry told the governing board at its last meeting of the year Thursday.
Bowry noted while WAPA's debts had not increased since the LEAC, neither have they been reduced. The utility is just staying even.
The two main expenses for WAPA are fuel and personnel costs. In November, the company's net income was $1.1 million, a 2.2 percent increase over the October net income, which had a net loss of a little more than $500,000. LEAC revenues drove the increase in net income, Bowry said.
In other action, the board approved the purchase of several company vehicles amounting to $432,350. The vehicles include a vacuum pump truck, utility jeeps, an FL80 Cab and Chassis and a pickup truck.
The board approved $495,000 in funding to hire MACTEC, an environmental consultant firm, to assist the authority with air compliance matters in the burning of fuel, which was sanctioned by the U.S. Environmental Protection Agency.
Contracts were also approved for two existing generators on St. Croix: Unit 10 and Unit 17. General Electric International was awarded a $1.27 million contract for major inspection, repairs and technology upgrade of Unit 17. Bruno-Vega said this would increase the efficiency of the unit. Dresser-Rand will perform an analysis on Unit 10 Turbine Road to evaluate what the problem is and fix it.
"The unit had malfunctioned, and we had to ship it out for them to fix it," Bruno-Vega said, adding that it will cost $250,000.
Bruno-Vega also told the board that a new generator on St. Thomas, Unit 23, was now in operation and would be inaugurated Dec. 30. He added that the unit was brought to its base maximum capacity of 42 megawatts on Wednesday.
"The fact that it runs at 42 megawatts and it runs so smoothly brings a level of satisfaction to all the team members in WAPA," Bruno-Vega said.
Bruno-Vega also announced the completion of a high-voltage transmission loop that will provide power to the East End of St. Thomas and St. John.
Before the loop, WAPA sent power to the East End and St. John through one bulk power distribution line. The system was not designed for single contingencies.
"If something were to happen, power would be interrupted to the East End and St. John for hours," Bruno-Vega said.
The loop creates a redundant energy path. If one part fails, the system will continue normally, increasing reliability of service that WAPA provides its customers.
The board also welcomed two new lawyers to the WAPA family Thursday: attorney Wayne Anderson and attorney Rhonda Hospedales, who will be stationed on St. Croix.
Board Chairman Daryl Lynch told the board this was the last time reports would be given to board members in paper format. From now on, reports will be delivered to the board via email for review prior to the board meetings to cut down on paper costs and to help the environment, he said.
The board then moved into executive session to discuss legal issues and negotiations.
Board members present were Lynch, Anduze, Alphonso Franklin, Claude Molloy, Ira Hobson and Yolanda Samuel-Deterville. Board member Cheryl Boynes-Jackson was absent.
Source reporter Tammy Kramer contrinuted to this story.

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