April 16, 2009 – While it is enjoying a period of relatively low fuel prices, the Virgin Islands Water and Power Authority board is aware that it is in a precarious credit situation.
The credit problem is not currently a crisis, but if any emergency should arise WAPA has nothing left in its coffers to tide them over on a rainy day.
The board met Thursday at its Sub Base headquarters on St. Thomas and acted on issues facing the authority, including giving the go-ahead for WAPA to commit to Phase 1 of the new WAPA headquarters across the street from the Crown Bay marine terminal on St. Thomas. The project is the start of a cost-sharing agreement between WAPA and the V.I. Housing Finance Authority and the board has authorized a figure not to exceed $200,000 for Phase I.
The board also authorized rehabilitation for the Altona Waterline at a cost of $703,567 to replace some 1,500 feet of cast iron pipe installed in 1966.
"The line is experiencing frequent leaks and problems with water quality," said Gregory Rhymer, WAPA's director of systems and planning.
The competitive bid for the project was awarded to Tip Top Construction and will commence in mid-June and be finished sometime around January, Rhymer said.
The board also approved payment of the PSC's assessment for $336,034.76, with board discussion of invoice oversight and how these assessments could be projected in the future.
"We have a fiduciary responsibility," Chairwoman Juanita Young said. "We want to make sure we are comfortable with what is being billed."
The authority is continuing to negotiate for repairs to its heat-recovery Unit 19. Early projections of the repairs are estimated at around $2 million, but the actual figure won't be known until the generators and rotor repairs are removed and tested. Funding for the repairs will come from internal reprogrammed funds.
The authority also will seek approval from the PSC to modify its fuel hedging program to allow for two new strategies for hedging, rather than its traditional approach to the program. Both Citibank and Morgan Stanley are unwilling to resume the hedge program under current terms.
"What Morgan Stanley and Citigroup have said is, given what is happening in the financial markets they need to change the arrangement," said Nellon Bowry, WAPA's chief financial officer.
The arrangements will require collateral that WAPA doesn't have.
"Why are we going to petition them if we don't have collateral?" board member Noah Loftus asked. "We're busted. Where are we going to get more collateral?"
The authority is also still involved in PSC rate investigation hearings. Complicating matters, the appointed hearing examiner, St. Thomas attorney Kathleen Mackay, has recently been appointed magistrate, with those duties commencing in early summer. The board expressed concern that the rate hearings might not be wrapped up before another hearing examiner has to be brought in, creating a need to begin the rate increase hearings all over again.
On St. Croix, the cost for repair to the WAPA offices has topped $60,000 according to Bowry. The Sunny Isles business office closed for environmental reasons in March, (See " WAPA Reopens St. Croix Customer-Service Offices.") and subsequent problems with the air conditioning system have been discovered according to Rhymer.
"We did a set of air testing in the building, and the air seems to be well," Rhymer said. "We will retest again and then have a meeting with employees to discuss findings and make them comfortable."
Board members attending the meeting included Donald Francois, Gerald Groner, Kenneth J. Hermon, Jr.,Loftus, Robert Mathes, St. Claire N. Williams and Young. Cheryl Boynes-Jackson and Brenda Benjamin were absent.
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