WAPA: Propane Conversion to be Completed in October

The territory’s long-awaited conversion to propane electrical generation will be completed in October, WAPA’s interim Executive Director Julio Rhymer told the utility’s governing board Thursday at its monthly meeting.

The $150 million undertaking has cost WAPA more than initially planned and has seen numerous changes in its projected completion date, but is expected to bring long-term rate relief to the territory.

"The project was delayed due to an operational failure during the commissioning process and an engineering design flaw that will be corrected in the coming weeks,” Rhymer said. “The project is scheduled for completion in October of 2016, with both plants fully burning propane and delivering power to the grid.”

During his executive director’s report Thursday, Rhymer also addressed a setback to another WAPA project: the deployment of automated metering infrastructure (AMI.) He said he expects the authority’s AMI project to be complete in December.

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"As for AMI, the St. Thomas/St. John District is 99 percent complete, but the St. Croix district installation was halted due to the delay in obtaining leases from the Government of the Virgin Islands and Homeland Security.”

Without those leases, Rhymer said, the authority was unable to install the needed towers to obtain readings from the newly installed meters. However, the leases were recently signed and towers were erected, and the project has resumed.

In his report Rhymer described WAPA’s last fiscal year as one which also presented more general challenges and setbacks, as well as increased risks.

"Challenges that continue to plague the authority include: liquidity, reliability and customer dissatisfaction," Rhymer said.

He added that due to WAPA’s continued high outstanding accounts receivable, the authority continues to experience challenges with cash flow.

Rhymer told the board that increased inherent risk has resulted in the downgrade of WAPA’s bond rating, investors pulling out of purchase contracts and exposure to other actions by the investment community.

He told the board his focus for the year ahead will be on the continued "right-sizing" of the authority, the incorporation of new, more reliable and efficient generation for both power plants, and more cost-effective street lighting to reduce operating costs. The operation of street lights on public roadways across the territory is an unfunded mandate on the authority with an annual price tag of $9 million.

At Thursday’s meeting, WAPA’s governing board formally accepted the 2015 electric and water systems financial audits, which revealed that in 2015 the electric system ended with an operating loss of $35.3 million and the water system also experienced an operating loss of $3.4 million.

The board also:

– Elected new officers as it is required to do at the first meeting of each new fiscal year. Elizabeth Armstrong was elected as the new chairwoman of the board while Noel Loftus, who most recently served as board secretary, was elected vice chairman. Juanita Young, who most recently served as vice chair was elected as board secretary.

– Approved an extension on an existing contract with Majestic Machine and Engineering for repair and reassembly of generating Unit 11 on St. Croix. The extension, the second since the contract was awarded in January, is at no additional cost to the authority.

– Approved an annual tree trimming and clearance contract for both districts with Asplundh Tree Expert Company. The $1.4 million contract will allow additional tree-trimming services required to supplement in-house trimming crews to protect the integrity and reliability of the WAPA’s transmission and distribution systems.

– Approved a resolution to create a voluntary employee beneficiary trust within the authority and to take all steps necessary to create and manage the trust. To accomplish this mandate, Rhymer said, WAPA has elected to create a Voluntary Employee Beneficiary Association which is a stand-alone tax exempt trust which will hold the retirees medical plan assets to offset future medical plan retiree liabilities. The trust is expected to be created within 30 days.

In addition to Armstrong, Loftus and Young, other board members present at Thursday’s meeting included Gerald Groner, Commissioner of Public Works Gustav James and Licensing and Consumer Affairs Commissioner Devin Carrington and Cheryl Boynes Jackson. Director of the Bureau of Internal Revenue Marvin Pickering was excused. 

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