Propane Contract Gets $10 Million Bump

The governing board of the V.I. Water and Power Authority authorized Wednesday another $10 million for its propane conversion project contract with Vitol Virgin Islands Corp.

This potentially brings the contract total to $160 million. The contract was originally signed for $87 million in July 2013. In November 2014 the board voted to raise the contract budget for the conversion project to $150 million.

According to WAPA officials at the time, “unforeseen circumstances” that came up during the project – from rough terrain on St. Croix and St. Thomas to bad weather – resulted in increased costs. Improvements, which also cover permitting costs and materials needed to complete the project, were also factored in.

This time the reason for the addition increase was “increases in terminal and storage facilities, engineering costs and increases in GE’s cost for the conversion.”  Vitol is paying all upfront costs for the conversion.

The contract is presently being audited and if charges are found not to be justified it could fall below the $160 million mark; $160 million is the high cap.

Board member Neil Loftus asked why the board was being asked to raise the cap before the completion of the audit, which should be finished early next year. He was told it was to ensure the continued shipment of propane.

St. Croix’s conversion is complete and St. Thomas’s conversion is expected to be soon.

The board worked on other fronts to save the utility money, approving an engineering procurement and construction agreement with Petra Inc. to replace old streetlights for energy-efficient LED lights, solar panels and controls. This process is expected to drop the annual cost of keeping the streetlights on from $9 million to $6.3 million.

The total cost of the project is to be $29 million, replacing 15,722 streetlights. Completion date for the project is to be the end of 2019.

The board also revised its generation action plan. The new plan is to acquire six new generating units at the Randolph Harley facility. This will, according to management request, “stabilize and simultaneously provide reliable and efficient power generation, avoiding potential compromise to public health and safety while lowering electric rates to consumers.” This project, according to the request, is contingent on “the executive director pursuing and obtaining funding via the PSC approval of rates to support same.”

An issuance of bonds was approved for funding the streetlights.