The Public Finance Authority Board officially authorized Ernst & Young as the turnaround management company for the V.I. Water and Power Authority. This decision, made Wednesday, follows Gov. Albert Bryan Jr.’s state of energy emergency declaration in April, which aimed to address the utility’s financial challenges.
Key to the emergency declaration is the ability for the government to tap into the Budget Stabilization Fund for approximately $11 million to cover outstanding utility bills owed by the territory’s two hospitals and V.I. Waste Management Authority, along with funding for the turnaround management agency, which was mandated in a bill-turned-law by the Senate without a designated funding source.
The contract was approved by the PFA board unanimously for an amount not to exceed $500,000. According to officials, five proposals were submitted and vetted by an Evaluation Committee whose members included WAPA board chair and Energy Office Director Kyle Fleming; PFA Executive Director Nathan Simmonds, Joan Foy, PFA General Counsel Lorelei Farrington and Government House Chief of Staff Karl Knight.
Other companies submitting proposals were Berkeley Research Group, PA Consulting Group, Inc., Ankura Consulting Group, LLC and FTI Consulting.
According to Farrington, “Ernest and Young’s previous work history with the Water and Power Authority demonstrates its grasp of the critical nature of its operational and financial state, and the committee’s recommendations are based especially on the familiarity with drivers such as Vitol infrastructure, LEAC, AMT system, service quality and availability, and project delivery.”
Ernst & Young’s initial report, due within six months, will focus on VIWAPA’s financial condition and will include assessments of ongoing projects, organizational structure, energy plans, debt management, water quality, and service quality standards, as laid out by law.
Within 120 days, the turnaround company is also expected a comprehensive turnaround report with recommendations for reducing energy costs, incorporating renewable resources, restructuring the organization, consolidating debt, and improving water quality and distribution.
