May 17, 2007 — Increased contract costs and one tricky federal requirement have forced V.I. Water and Power Authority officials to make minor changes to a financing package for a new waste heat-recovery boiler and other major capital-improvement projects.
Hoping to keep the ball rolling, WAPA governing board members lent their support Thursday to the new funding proposal, which hinges on the issuance of approximately $97 million in bonds.
At a meeting held earlier this month, WAPA's initial financing package was cleared by Public Services Commission board members, who gave the authority the go-ahead to conduct two separate bond transactions. One allowed the authority to refinance a portion of its 1998 series bonds — some $40 million — at a lower interest rate, while the other authorized the issuance of up to $65 million in new electric system-revenue bonds to pay for the boiler, a few repair and maintenance projects and a $10 million line of credit.
During Thursday's board meeting, WAPA Executive Director Alberto Bruno-Vega explained that because of recent negotiations with a contractor, the authority has incurred a few million dollars worth of additional expenses, increasing the cost of the boiler project to $34 million.
While the increase can be covered through the $65 million bond authorization granted by the PSC, Bruno-Vega explained that the authority will now have to reevaluate how to cover the cost of repaying the additional funds.
Certain federal requirements have also hindered the authority's ability to complete its entire bond-refinancing transactions within the next few months, according to WAPA Chief Financial Officer Nellon Bowry. A portion of the 1998 series bonds — approximately $29 million — has already been refinanced, and cannot be refinanced again until next year, Bowry explained after the meeting.
While this could put a damper on WAPA's financing plans, in the interim the authority will refinance the remaining $18.5 million in 1998 series bonds at a lower interest rate.
In other action Thursday, the board approved:
— a $22.4 million contract with Island Mechanical Contractor to install and commission the waste heat-recovery boiler on St. Croix; the contract includes $3 million to begin construction of the foundation and will be funded through the authority's new electric system-revenue bonds;
— a funding request for $100,000 to install additional service lines and purchase pipes for the Midland Road waterline-replacement project on St. Croix;
— a funding request of $220,897 to the Department of Planning and Natural Resources to pay emission fees required for the St. Thomas and St. Croix power plants;
— a funding request for $801,681 to purchase boiler feed pump equipment from Industrial Automation for the waste heat-recovery boiler;
— a $2,500 contribution to the American Cancer Society for WAPA's participation in the annual Relay for Life; and
— a funding request of about $1 million to purchase cable from Electric Supply of Tampa for the double bus substation project at the Randolph E. Harley power plant on St. Thomas.
WAPA board members also discussed plans for the upcoming hurricane season, which include improved communication efforts and the identification of several priority locations.
Board members also bade a tearful farewell to Bruno-Vega, who will leave WAPA at the end of this month to return to his native Puerto Rico. (See "Bruno-Vega: WAPA Would Be Better Off Without PSC Yoke.")
"I had the opportunity to participate in the selection of two of our executive directors," said board member Alphonso Franklin. "The last time, I remember we reviewed over 18 submissions. And when it came down to the final five — of which you were one — it really took a great deal of energy to make a final decision."
With a smile on his face, Franklin added, "I must tell you honestly that I did not vote for you, but looking back in retrospect it would have been a terrible mistake if we had had anyone else but you at the helm. I think the other five expected to be paid more."
Bruno-Vega assured board members that he would only "be a phone call away" if they had questions or needed assistance.
"You can call me anytime, anywhere," he said.
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