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WAPA Bills Should Fall by January With Propane Switch

WAPA CEO Hugo Hodge, Jr.Electrical customers will begin seeing a reduction in their power bills in January as the V.I. Water and Power Authority brings its conversion from petroleum to propane online, WAPA CEO Hugo Hodge, Jr. said Thursday.

Speaking on a telephone news conference, Hodge said the conversion to propane, dubbed Operation Game Changer, has been delayed slightly, from the final quarter of 2014 to the first quarter of 2015, but that the delays will not change the reduction costumers can expect to see in their bills.

“The new construction schedule will not impact the amount of savings expected for WAPA’s customers or the improvements in air quality that the conversion project will deliver for the territory," Hodge said. "We still anticipate a 30 percent reduction in the cost of fuel, which will be passed along directly to customers. While this schedule represents an adjustment of a few months, we look forward with great anticipation to providing these benefits to the community. Our entire team is focused on finishing this complex project as quickly and safely as possible.”

Hodge said WAPA will submit a rate reduction in December that he believes will be approved by the Public Services Commission and go into effect in January. The reduction will affect the Levelized Energy Clause (LEAC) rate, which reflects fuel cost.

WAPA began Operation Game Changer in July 2013, and since then has followed what Hodge called an "aggressive" schedule to get the system up and running. Front-end engineering and design (called FEED) for both islands were going on simultaneously with equipment procurement, vendor selection and contracting.

Hodge said WAPA has sped up acquiring materials that require long lead times and implemented other time-saving measures to compensate for normal permitting and construction delays.

“From the beginning, we adopted an aggressive strategy that allowed contractors to begin their work and to get this project completed as early as possible," he said. "Normally, the FEED and the final detailed design are finished sequentially, and only then contractors are engaged. In our case, because of our desire to advance this project, we did the FEED, detailed design, and procurement, essentially simultaneously.”

WAPA has already taken care of 10 of the 18 tanks designed and built specifically to safely store propane on WAPA’s existing plants on St. Thomas and St. Croix, he continued.

But despite those efforts, Hodge said, a variety of issues forced the utility to adjust the project schedule.

The expansion in scope relates to aspects of permitting and construction that were unforeseen at the time the project was launched last year, according to Hodge. WAPA and its contractor, Vitol, are "doing everything possible to complete the project as quickly as possible."

These steps include:

  • working six days a week, 10 hours a day;
  • committing to the long lead items necessary for the project as early as possible;
  • working simultaneously on all remaining phases of the project, and;
  • taking steps to allow propane to be introduced in individual turbines as each one becomes converted instead of completing all the turbines first before propane is used.

Reasons Hodge gave for the schedule adjustments were:

  • Extended work on the design, procurement, and installation of the necessary resources to upgrade the authority’s existing fire protection, controls, and systems for the safe use of propane;
  • Undocumented soil conditions and underground obstacles on St. Croix;
  • The volume of rock needed to be moved on St. Thomas was greater than anticipated;
  • The complexity of permitting, contracting, demolishing, and disposing of structures with lead-based paint;
  • Greater challenges than anticipated in coordinating the conversion of the power plants to safely burn propane while simultaneously operating power generating facilities to meet daily electricity demand;
  • The reality of global sourcing of all the materials and equipment for the project;
  • adverse weather conditions in the early phases of the project.

The conversion of seven turbines from petroleum to propane is expected to reduce the cost of fuel 30 percent, or about $90 million annually, and reduce emissions of greenhouse gases about 20 percent, Hodge said.

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