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HomeNewsLocal newsWAPA's Frozen Bank Accounts Tied to Lawsuit, Court Records Show

WAPA’s Frozen Bank Accounts Tied to Lawsuit, Court Records Show

It wasn’t until the V.I. Water and Power Authority tried to pay for a fuel purchase on April 17 that it discovered its FirstBank account with some $6.9 million in funds had been frozen, documents in a long-running lawsuit against the utility reveal.

It was the same day that St. Croix customers were placed on rotating outages during peak consumption hours, which WAPA at the time blamed on emergency repairs to the T1 Transformer “due to changes of the increased load caused by the change in operational configuration of the available generators at the Richmond Power Plant.”

Office of Management and Budget Director Jenifer O’Neal mentioned the frozen accounts during a Government House press briefing on Tuesday that largely concerned WAPA’s ongoing financial, operational and maintenance woes that have led to frequent and lengthy blackouts the last two months. O’Neal is the incident commander for the state of emergency that Gov. Albert Bryan Jr. declared over the utility on April 22.

Along with FirstBank, WAPA’s Banco Popular account also was frozen, but that has since been resolved, O’Neal said Tuesday, without offering any details about why the accounts were frozen in the first place.

It turns out that Power Rental Op Co., LLC secured an order on March 25 in Puerto Rico District Court to have the accounts frozen, which occurred on April 16 when the U.S. Marshal served the writ “on First Bank Virgin Islands in Puerto Rico, levying approximately $6.9 million of WAPA’s funds,” according to the utility’s emergency motion to quash the order that it filed two days later on April 18.

Power Rental sued WAPA in February 2020 in Florida district court over $14.2 million it alleges was owed under a rental agreement for power generation equipment and water treatment systems. It prevailed and WAPA was ordered to pay $6.5 million and another $349,279 for attorney fees and costs. The company subsequently removed the case to Puerto Rico, where it registered its judgment from Florida in February and in March was granted the writs of execution to collect on its debts.

WAPA has argued that the writs should be dissolved, claiming that its accounts are located outside of Florida, operate solely in the U.S. Virgin Islands, and are protected under the territory’s sovereign immunity laws.

On May 8, the court granted WAPA’s emergency motion, in part — quashing the writ pertaining to Banco Popular but leaving it in place for the FirstBank account. Because the writ was for some $6.8 million (with interest accruing), and the FirstBank account contains sufficient funds to cover that amount, there is no need to also freeze the Banco account, Judge Maria Antongiorgi-Jordan ruled.

The judge cited Bryan’s state of emergency as the reason for her ruling.

Indeed, WAPA’s emergency motion reveals just how precarious the situation was, including an affidavit from Lorraine J. Kelly, interim chief financial officer at the utility.

“On April 17, 2024, the Authority attempted to enter into a transaction to purchase fuel for its citizens, but the transaction was declined by FirstBank because of the Writ of Execution,” Kelly stated.

“WAPA was obligated to make an additional fuel purchase on Thursday April 18th, but it was unable to do so because WAPA’s funds had been levied pursuant to the Writ. The April 18th payment was remitted on Friday April 19th. WAPA intended to make an additional fuel payment on Monday April 22nd, now Wednesday April 24th, but is without the funds to do so,” according to the affidavit.

“If the Writ is not immediately quashed, WAPA will be unable to maintain its fuel inventory, resulting in significant damages not only to WAPA but, as the sole utility for the Virgin Islands, to the Health, Safety and Welfare of the people of the Territory. Therefore, the Writ goes against public policy and the exemption pursuant to 30 VIC § 111. In addition to powering generators, fuel is required for the desalination process that provides drinking water to the citizenry,” said Kelly.

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