Before it withdrew several of the V.I. Water and Power Authority’s bond ratings in mid-December, Fitch Ratings actually reached out to discuss their concerns about the utility’s lack of financials and while it’s been reported that the action will have a negative impact on the authority, its chief executive officer said that’s not the case.
“WAPA is no worse off now than it was before,” WAPA CEO Andy Smith said in a call with the Source Thursday night. “We talk to the rating agencies on a regular basis and Fitch Ratings actually told us beforehand that it was going to take this step so there’s nothing acrimonious in our relationship.”
Smith added that the authority has been public about its lack of audited financials beyond fiscal year 2020 and had to lay the groundwork in streamlining its systems and processes before it could move forward with audits for fiscal years 2021-2023.
Out of the authority’s total $243 million in debt, about $143 million was rated by Fitch. Conversely, that means about 40 percent has never been rated by a rating agency, Smith said, on par with the national average of 35 percent of U.S. municipal debt, which is also issued without ratings.
The next step, he added, is fixing WAPA’s billing process, which has been ongoing for about six months, closing the authority’s propane system acquisition from Vitol and getting the series of Wartsilia generators on St. Thomas fully online. After that, he added, the authority can also go back to looking at new generation options for St. Croix.
Smith said the authority is also actively working with the V.I. Inspector General’s Office on an audit of the authority’s operations, which senators mandated last June and publicly announced in press releases Thursday.
Senators directed and funded the audit, which will cover several issues to include matters related to the controversial Vitol propane contract, the electronic metering system, various leases, the shipment of WAPA equipment to the British Virgin Islands, and the loss of more than $2 million to an offshore account, according to a release from Sen. Kenneth L. Gittens.
“These matters were never fully resolved by WAPA and the Legislature determined that much more information was required in these areas,” Gittens said. “If we don’t have a better understanding of what transpired and make an effort to hold individuals accountable for their actions, how can we ensure that WAPA does not make these same mistakes in the future?”
Gittens added that the recent announcement from Fitch also underscores the importance of the audit in bringing more transparency to the utility.
“WAPA’s success is tied to the well-being of every person in this territory,” Gittens said. “We need to be assured that every step is being taken toward true accountability and better management. WAPA’s long-time behavior has created a culture of mismanagement at the Authority that must be addressed.”
Smith said Friday that the authority welcomes insight from the Inspector General’s office in identifying weaknesses and areas in which the business side can run better.
“We had a kickoff meeting with them and provided extensive information,” he said. “If they can come in and identify weaknesses that we are not aware of and where our business can run better, then that’s always important.”
Individual meetings between the Inspector General’s Office and WAPA staff begin Friday, he added.
