The V.I. Water and Power Authority Governing Board found out Thursday that the utility has received a favorable financial audit for 2008 fiscal year.
The firm of Ernst and Young conducted the audit. WAPA is now reviewing the audit, preparing to respond to two audit concerns: how WAPA will address a $6.6 million liability arising from a new federal accounting principle regulating non-pension benefits; and how WAPA values its capital assets.
Ernst and Young also told the board if WAPA does not start recovering its fuel costs from ratepayers more quickly, auditors may need to treat the costs as liabilities. This might change the debt ratio coverage on WAPA’s bonds and possibly hurt its bond rating. Deferred fuel expenses result from WAPA’s inability to collect actual fuel costs from customers through the Levelized Energy Adjustment Clause factor, also known as the LEAC.
When the LEAC rate approved by the Public Services Commission prevents WAPA from fully collecting such costs on a timely basis it hurts WAPA’s bottom line, WAPA Executive Director Hugo Hodge said.
In other matters, the board authorized Hodge to:
• Reallocate $518,000 from WAPA’s series 2003 bonds plus another $1.4 million in interest earnings in the 2003 Construction Fund and apply $1.6 million of that money to constructing the Randolph Harley Substation and $350,000 to the energy saving waste-heat recovery boiler on St. Croix;
• Allocate $1,256,000 in the 2007 Construction Fund and $1,267,000 in interest earnings in that fund, applying $2,000,000 of that money to the waste-heat recovery boiler and $523,000 to the cost of rehabilitating power generating unit 11 on St. Thomas;
• Approved a 90-day contract extension for water plant operator Ambient Technologies, starting September 1, at a cost not to exceed $400,000, while a new contract is negotiated with the supplier;
• Authorized Hodge to purchase one bucket truck from Peco International for the St. Croix Line Department for $246,000, one bucket truck for the St. Thomas Line department at $218,165 and one Digger Derrick truck for St. John’s Line Department at a cost of $297,898;
• Approved a $4.2 million payment to General Electric for emergency expedited major inspection and repairs of Unit 23 on St. Thomas;
• Authorized the drawdown of as much as $6 million from WAPA’s Electric System Capital Projects Lines of Credit at First Bank and Banco Popular for repairs to St. Thomas Units 12, 13 and 23.
Management also reported to the board the Harley Substation Project in St. Thomas should be completed in October and the construction of the St. Croix waste-heat recovery boiler is complete. Technicians will test control systems and perform the final chemical clean out of the boiler before it is put into commercial operation in December.
The board also discussed WAPA establishing itself as a utility Energy Service Company, a new business line to offer assistance for customers’ energy efficiency needs.
Attending Thursday’s meeting were Brenda Benjamin, Donald Francois, Atty. Gerald Groner, V.I. Personnel Director Kenneth Hermon, Jr., Noel Loftus, Juanita Young and Commissioner of Licensing and Consumer Affairs Wayne Biggs; the board’s newest member. Absent were Department of Planning and Natural Resources Commissioner Robert Mathes and Cheryl Boynes-Jackson.
