Confluence of Positive Developments at WAPA Gives Rise to Hope of More Reliable, Affordable Energy in USVI

Representatives from the V.I. Water and Power Authority struggled to convince skeptical lawmakers that the chronically cash-strapped utility has a sensible financial management strategy for the challenging economic times WAPA finds itself in.

WAPA Chief Executive Officer Andrew Smith during the Tuesday hearing focused his initial testimony before the 35th Legislature’s Committee on Budget, Appropriations and Finance on highlighting what will have the largest positive impacts on WAPA’s bottom line: the pending finalization of the VITOL debt repayment deal, the coming online of four new energy-efficient generators on St. Thomas, and power purchase agreements that have been signed for wind and solar energy generation projects.

Under the terms of the negotiated settlement with Vitol, WAPA has one more payment of $100 million due on August 14, after which the utility company will have no further financial obligations to the propane supplier, Mr. Smith said. He expressed gratitude towards the Legislature for approving the initial $45 million, without which Mr. Smith says WAPA would have been forced to fall back to expensive diesel-generated power, like it did in December last year during a payment dispute with VITOL.

After the August 14 payment is made, not only will WAPA be free of the threat that it might have to revert to diesel for generation, questioning by Senator Dwayne DeGraff revealed that WAPA is expecting its cost to import propane to drop precipitously as well. After the authority concludes its business with VITOL in August, a new contract — currently under negotiation – is expected to be signed with a new supplier. Jacob Lewis, WAPA’s chief financial officer, told Sen. DeGraff that costs would drop from almost 70 centra per gallon for propane transport down to the “low 30 cent range.“ Mr. Smith agreed with the projections. “I'm very comfortable with the numbers that CFO Lewis has presented,” the WAPA CEO told DeGraff, who remained skeptical.