May 13, 2009 — It has been six months since the turbines (or windmills) behind Tutu Park Mall were constructed, so why aren't they turning?
The Virgin Islands Water and Power Authority and Island Wind Power's inability to reach an agreement on interconnection brought the two parties before a Public Services Commission hearing examiner Tuesday and Wednesday.
Hearing Examiner Rosalie Simmonds Ballentine will weigh the evidence from the hearing, along with testimony from witnesses and briefs, in her report to the commission. The report will be a part of another public hearing before the commission.
Interconnection will give the turbines the physical link to the grid they require to start turning and generating power. While they need to "feel" the grid, the turbines will not draw any electricity.
The turbines are owned by Island Wind Power, which made an agreement with Tutu Park to lease the turbine equipment to the mall. Island Wind Power acquired the funding needed to buy the equipment, build the facility and maintain it.
Under the lease, the mall uses the energy that comes from the wind turbines to light its common areas and to provide electricity for other appliances in the common areas. The turbines can provide five to 10 percent of power for common areas in Tutu Park Mall.
At issue is the basis for arriving at the lease fee and Island Wind Power's status as a qualifying facility. The PSC has certified Island Wind Power as a qualified facility to generate power.
Instead of a flat monthly fee, Island Wind Power's lease fee is based on 80 percent of WAPA's per kilowatthour rate. For instance, if the mall used 100 kilowatt hours, and WAPA was charging $1 per kilowatt hour, then Island Wind Power would charge the mall $80 for 100 hours of the energy it used from the turbines.
After the company reviewed a number of pricing models, mostly from the European market, it decided to base the lease price on the WAPA index.
The PSC has certified Island Wind Power as a qualified facility to generate power.
WAPA has filed a petition with the PSC to rescind this status, saying that Island Wind Power is charging for electricity.
The development of the pricing model is evolving, according to Dan Mulligan, CEO of Island Wind Power.
"Nobody knows how to get this stuff done," Mulligan said. "You can't just go to the library and pull this stuff up. We had to decide where to start."
"Our investors wanted to invest in the United States, so we used those templates and models," Mulligan said. "Over time you get your capital back and hopefully make a profit."
Conceding that the use of private capital was unique to this effort, Mulligan said the investors thought they might recoup their investment in five years.
Mulligan testified that his company was initially welcomed here, and the status of the project is at the last stage – seeking interconnection.
WAPA has approved the wiring diagrams and holds the only key to an emergency shut off switch.
Mulligan testified that other Virgin Islands businesses had shown interest in Island Wind Power's program.
WAPA is not opposed to the use of wind power, but objects to the pricing methodology for the lease and has petitioned the PSC to revoke Island Wind Power's status as a qualifying facility.
WAPA's rates are regulated by the PSC, Island Wind Power, as an unregulated entity is not. WAPA's energy is generated from fuel oil so its cost is based on the cost of oil. While the wind is always going to be free, oil prices can fluctuate widely.
"It affects WAPA if what they are doing is picking off the large customers and leaving WAPA to service homeowners and other small businesses," said Sam Hall, outside counsel for WAPA.
WAPA is required to maintain the islands' entire power infrastructure to all of its customers, not just the large commercial entities, but residential and small businesses as well.
"In aggregate, when you total all the customers and customer types that are being targeted, it puts that burden on remaining customers," Hodge said. "(Operation and maintenance) costs are constant."
The lease fee should be based on Island Wind Power's costs for equipment, construction and some reasonable net profit, Hodge said.
The basis for the pricing mechanism has been upheld by the federal counterpart of the PSC, the Federal Energy Regulatory Commission, according to Emily Sabo, counsel for Island Wind Power.
"My client is simply asking the PSC to adopt same legal standard that the FERC has adopted," Sabo said.
At the hearing's conclusion, Ballentine asked attorneys for both Island Wind Power and WAPA to answer the following in their briefs, due June 8:
– Does the PSC have the jurisdiction to consider revoking Island Wind Power's certification as a qualified facility?
– Is Island Wind Power a qualified facility and if not, what should PSC do to remedy the situation?
– If Island Wind Power is a qualified facility, should the PSC order interconnection with WAPA?
– Would it be appropriate to consider the last interconnection draft agreement between Island Wind Power and WAPA as the basis of the PSC's order?
The public can submit comment by e-mail to Michael Moore, or by fax to 340-774-4971. The PSC offices can be reached at 340-776-1291 or on St. Croix 340-778-6010 on St. John 340-776-1391. www.psc.gov.vi.
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