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Decision on Energy Alternatives Slow in Coming

Oct. 10, 2005 — The request for proposals from potential small power suppliers to the V.I. Water and Power Authority went out at the end of September.
May Adams Cornwall, executive director of the Waste Management Authority, hopes to meet with Alberto Bruno-Vega, executive director of WAPA, before those proposals start coming back in. WAPA will host a proposers' conference on Friday and accept submissions until Nov. 30.
Cornwall said she sees awarding a contract from WAPA to a power provider as possibly helping resolve "two Virgin Island problems in a wise and environmentally friendly way."
The two problems are the islands' troubled methods of waste disposal and their addiction to expensive oil to produce energy.
Cornwall said last week it could push the Waste Management Authority's long-term plans a lot further ahead if WAPA chooses a power provider with the ability to change waste to fuel.
However, Bruno-Vega is sure to point out to her that in the weighted criteria arrived at by WAPA and the Public Services Commission, environmental impact is way down on the list. First, WAPA will be screening all applicants to determine the company's economic viability and to assess whether it can really do what it promises.
After the initial weeding, the first criteria will be the price of the energy that will be offered to WAPA. The second criteria will be how many jobs the applicant can create on St. Croix. Then the environmental impact comes into play.
A prerequisite for the company to be selected is that the power provider must be certified by the PSC. Although more firms might get certified, currently there are only four certified and only two that could possibly help with the waste problem — Antilles Energy Cooperative and Caribe Waste Technologies.
Officials from both firms say they would also meet the other prime criteria — providing power at a lower cost than it takes WAPA to produce it as well as produce a lot of jobs.
When the Source spoke to principals in both companies last week, the companies had not yet received the latest request for a proposal from WAPA. The saga of WAPA obtaining an alternative power supplier has been going on for years and the rules have frequently changed. This is the second RFP sent out by WAPA. The Senate passed a bill related to it called Emergency Jobs Creation and Economic Stimulus Act of 2005. After a couple months, the Senate changed the bill drastically through amendments.
Last Thursday, Frank P. Wilbourne, president of Antilles, laughingly said, "I wonder what ball park we are playing in today."
However, Antilles is a relative newcomer to the process. It was certified in August of this year. (See "PSC Certifies Fourth Small Power Provider").
Caribe Waste Technologies, on the other hand, has been working in the territory trying to get government business for more than five years and has run into various entanglements with the government. (See "WAPA Sued over Failure to Agree to Purchase Power").
Some officials at the companies expected to join in the latest bidding have quieted down on claims about how much money they can save WAPA because they are in the bidding process — trying to give WAPA the best deal while they still make a profit.
"We have proposed selling to WAPA electricity and desalinated water at a price less than WAPA's avoided cost. This would result in reducing the cost of water and electricity in the territory," said Frank Campbell, president of Caribe Waste Technologies, in an e-mail last week
Avoided cost is — at its minimal level — the cost WAPA can avoid by not producing power, explained PSC counsel Boyd Sprehn.
"If WAPA stops running its generators, how much money does it save," Sprehn said.
If the authority is not running it's equipment full time, it won't use oil and it will save wear and tear on its equipment.
Limit on savings
There is a limit to the savings, however, because WAPA still has to generate steam to produce water, Sprehn said.
"There is also a point at which not running the machinery can begin to actually cost WAPA money," he said.
The other part of the avoided cost calculation is what does additional production cost WAPA.
"If you need to expand your capacity, what is the new power going to cost," Sprehn said. "That's the part we [the PSC] are looking at now."
Sprehn said it is the future power production issue that most utilities elsewhere are addressing.
"We'll be consuming more power in five years than today. The costs are going to go up," Sprehn said. "That's where most power plants are buying from outside power producers, on a forward basis so they don't have to expand their capacity."
Peak power was at 75 megawatts five to seven years ago, Sprehn said. Currently WAPA is using 85 megawatts at peak times. The authority has had to expend substantial amounts of capital funds -— issuing bonds to raise the money — to meet the increased demand. Bruno-Vega has pointed out that just one project — Yacht Haven on St. Thomas — is expected to need an additional 10 megawatts.
Better bidding
Sprehn said if WAPA had a good plan that will lay out clearly what avoided costs going forward will be it will give bidders something to bid against.
Wilbourne sticks to a statement made in an earlier hearing. He said Antilles could guarantee a rate of 9.2 cents a kilowatt hour for the next five years, against WAPA's current cost of about 24 cents a kilowatt. Carrying out the numbers, Wilbourne said this can save ratepayers $58 million a year.
However, Wilbourne appears to be basing those figures on a scenario that may not happen. Antilles wants to build two 60 megawatts plants. WAPA is looking for less than half that amount of power.
Caribe Waste is looking at building a plant in the 20 to 25 megawatts range. The company also seems more focused on using waste generated in the Virgin Islands as its energy source. Campbell says simply that the company's energy source would be "the renewable energy in the territory's waste."
"The waste would be obtained by entering into a long-term agreement (usually 30 years or more) with the Waste Management Authority," he said.
Wilbourne indicated that the primary source for Antilles' biomass gasification process would be a crop grown in Puerto Rico. However, he added, waste from the Virgin Islands could be used on a supplementary basis, if it is properly separated.
The Waste Management Authority’s Cornwall said she talked to representatives from both companies and that her agency would do the necessary separation if it could take the pressure off the territory’s landfills.
She said she also talked to representatives of a third company —Full Circle Industry — that is not yet certified, but is interested in a process of turning waste into energy.
Cornwall said she does not care which of the companies WAPA chooses, but she hopes it is one that can help the Virgin Islands with its waste problems.
Wilbourne said that if Antilles is allowed to build two plants -— one on St. Croix and one on St. Thomas — it would employ about 130 people.
During the construction of the facility, Campbell said his company would employ as many as 250 people. Over the 30-year operation and maintenance term, it would employ 80 people in permanent jobs.
Both companies say that their procedures create negligible amounts of waste and everything can be recycled.
The fourth weighted criteria, according to Bruno-Vega, in the selection process is how soon the power can be supplied to WAPA. Wilbourne and Campbell both said that after the permitting process was complete, their companies would be operational
in 21 months.

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