After two months of mechanical problems, the long-awaited money-saving heat-recovery steam generator on St. Croix should come online in mid-February, Water and Power Authority officials told the Public Services Commission (PSC) Wednesday at a meeting on St. Croix.
The steam generator, the second for St. Croix, will produce more than half as much electricity as the original boilers feeding it, essentially getting a 50 percent boost in the power generated by a gallon of fuel. A similar generator has been online on St. Thomas for some time, and a second one was completed ahead of schedule last September.
The new unit on St. Croix, however, has been plagued with delays. The project was approved in 2006, and groundbreaking was held in Sept. 2007. In January 2009, WAPA announced a delay of six months or more to the project due to Hurricane Omar, problems with overseas manufacturing plants and shipping problems. But work proceeded, and in November 2009 WAPA fired it up for the first time. That is when a heavy industrial water pump for the boiler failed, WAPA’s Richmond Plant Supervisor Kevin Smalls told PSC board members Wednesday.
"Everyone was pretty excited for the test, with everything a go after all this time," Smalls said during a break in the meeting. "So it was a letdown for all of us when the pump failed."
WAPA had the pump repaired, whereupon it failed twice more in exactly the same way. So a metallurgical analysis was done of the pump parts, which found it did not meet specifications. The manufacturer is standing by its obligations and has supplied a new pump, which arrived recently and was being installed Wednesday, Smalls said.
WAPA will be doing steam-blasting of the equipment over the weekend, so Christiansted residents can expect some noise from the Richmond power plant, Smalls said. If all goes well, it will go online around Feb. 15, he said. The boiler will save millions of dollars in fuel, helping to keep the hated Levelized Energy Adjustment Clause (LEAC) fuel surcharge down. But the current LEAC rate is set as if the boiler were already online, so residents will not see an immediate reduction in their bills because they are already enjoying that reduction now. Meanwhile, once it is up and running, in March, the base rate will go up by 0.0022 per kilowatt hour.
On the financial front, the PSC approved WAPA plans to refinance a lot of its existing bond debt at lower interest rates. By paying down higher interest, shorter-term debt and replacing it with lower-interest, longer-term debt, WAPA can get millions for capital improvements right now and also pay less in debt service every year, making the refinancing a win-win scenario, WAPA’s Chief Financial Officer Nellon Bowry said. Rates fluctuate constantly, but at current rates, refinancing would translate to a 4.2 to 4.3 percent savings in the interest rate.
David Womack, managing director of Rice Financial Group, the company offering the new bonds, described the package. Roughly $57 million in existing 1998 series bonds, and two sets of more recent bonds with a combined value of $15 million would be paid off and replaced by new 2010 bonds. Additionally, WAPA could be issued up to $26 million in completely new bonds to finance new capital projects. At the end of the day, WAPA would be saving roughly $300,000 a year over what they pay in interest right now, he said.
Clinton Hedrington, director of transmission and distribution, said the money would go to
a $12 million replacement substation at Estate Richmond and a second $8 million dollar substation mid-island on St. Croix. Though physically much more spread out, St. Croix has only one substation, while St. Thomas has several, making St. Croix’s line losses worse, he said.
Adding these substations are necessary for a planned petroleum coke and waste-to-energy plant on the island’s south shore, but they will improve the grid, reduce line loss and save ratepayers money whether or not that plant is built, he said.
Another $4.4 million will pay for a third submarine cable to St. John, adding redundancy to its grid, making power outages less likely and more containable, and providing capacity to handle growth on St. John.
Also on WAPA’s agenda for the funds are new transmission and distribution dispatch centers on St. Thomas and St. Croix, for about $8 million; while $3 million will go to relocate the line departments on all three islands, and another $3.9 million will go to build a new administrative building.
Georgetown Consulting Group, the PSC’s technical advisors, recommended approval, and the PSC voted to authorize the bond payment without dissent.
Voting yea were: Joseph Boschulte, Donald Cole, Verne David, M. Thomas Jackson, Sirri Hamad and Elsie Thomas-Trotman. Sens. Michael Thurland and Patrick Sprauve, who are ex-officio members, were absent. Senate was in session on St. Thomas Wednesday.
In other business, WAPA officials and Emily Sabo, an attorney representing Island Wind Power, said a major windmill project for St. Thomas’ Tutu Park Mall has been delayed by paperwork and the need for WAPA to install a meter. If the meter is installed and all parties can get together for the final inspection and connection to WAPA’s grid, the windmill may go active and start generating power the first or second week of February, Sabo said.
