The V.I. Water and Power Authority’s financial problems are deepening as the cost of liquid propane gas continues to rise, according to a report presented during a recent meeting.
Seven WAPA governing board members met via video conference on May 27, where they first voted unanimously to approve no-cost time extensions for contracts with Arcadis on St. Thomas and St. Croix.
Board Chairman and Property and Procurement Commissioner Anthony Thomas was the only member absent, and Vice-Chairman Jed JohnHope presided over the meeting.
Arcadis provides air pollution consulting services required by a federal consent decree, according to interim WAPA Executive Director Noel Hodge.
Hodge said that “one of the last requirements needed to petition the St. Croix facility out of the CD is the stack testing,” but COVID-19 caused delays, and testing at the Richmond power plant is scheduled to begin soon.
Hodge also gave board members a report that painted a dire picture of the Authority’s financial situation, given recent trends in fuel prices.
The switch from diesel to liquid propane gas at the Richmond and Harley power plants was initially touted as a more efficient, cheaper fuel for power generation that would reap cost savings for WAPA customers.
But fuel prices “have almost doubled what we projected” in recent months for liquid propane gas, or LPG, Hodge said. “Prospects for the near future [are] not looking very good.”
In an effort to correct WAPA’s finances, “I see that there’s a need that we must find a more efficient and timely way to recover our fuel costs through rates. Since the year began, even with the escalation in the LPG pricing, we haven’t had rates to cover that. And we have a rate petition on the LEAC but that’s not going to go into effect until July 1,” Hodge said.
He added that WAPA would be talking to financial consultants “to hedge ourselves against these volatile commodity pricing that we’re seeing, and we’re seeing inflation on commodities across the board for the U.S. since the beginning of this year.”
The consultants “are telling us that we’re going to need a credit facility, a line of credit to get the hedging going and they also speak about the financials and getting the 2019 audit done. So, we have follow-up updates on the hedging,” Hodge said.
WAPA has been unable to pay down its existing lines of credit, and has repeatedly voted to defer payment to banks.
Hodge did report one piece of positive news. He said that the Federal Emergency Management Agency and U.S. Treasury “approved requests for a deferral of payments on the Community Disaster Loan, CDL, we received that a couple of weeks ago. So, we’re happy about that.”
He added that the agreement “essentially deferred principal and interest payments on the CDL from resuming on July 1 of this year and pushing it back to Jan. 2, 2024.”
“We will have to continue paying the debt service reserve fund on the CDL, but the principle and interests are deferred, and that’s a positive, that is some good news,” he said.
Hodge concluded by mentioning the recent Fitch Ratings report that maintained a negative rating watch on more than $170 million of V.I. Water and Power Authority debt.
The report, he said, pointed to the Legislature’s passage of Bill No. 34-0021, which would have given the Public Services Commission more regulatory authority over WAPA and called for a turnaround company to be brought in to rehab the utility company.
Bryan has since vetoed the bill, but “it’s a concern they cited specifically in the article that was released,” Hodge said.
JohnHope gave board members an opportunity to speak, but there was no public discussion on the report before board members went into executive session.
“Everyone is particularly quiet today,” JohnHope remarked.
WAPA spokesman Jean Greaux Jr. said in an email that the board came out of executive session and reported that they had “discussed legal and personnel issues,” and “approved, ratified and enacted the Board Safety Leadership and Governance Policy as of May 27, 2021,” and “approved an engagement with Ernst and Young with regards to certain financial tasks.”
The board also “considered and took action on a current legal dispute,” according to Greaux.
The Open Records Act requires that all actions must be made public, and “a copy of the vote on any action taken by an agency in a meeting closed to the public” pursuant to the law “must be made available to the public, excluding any information exempted from public disclosure.”
The V.I. Code goes a step further and details exactly what should be maintained on a public document as a record of all votes, including “the names of all agency members present at the time of the vote,” “a description of the matter on which the vote was taken,” and “a record of each member’s vote.”
WAPA officials including counsel, Akeel St. Jean, have not responded to requests from The Daily News for information about the “dispute” or what action, specifically, was taken.
Meanwhile, WAPA ratepayers are continuing to endure random power outages, like one that occurred on St. Croix on Thursday.
WAPA issued an alert at 10:41 a.m. that there was “a major electrical service interruption the St. Croix district following the loss of generation capacity at the Estate Richmond Power Plant.”