WAPA's budget assumes continued infusion of federal funds to stay afloat

The V.I. Water and Power Authority’s proposed budget assumes the local government will keep funneling federal money to the utility to keep it from running out of cash, and WAPA CEO Andrew Smith said they’re anticipating $48 million a year, or $4 million a month.

That stunned lawmakers, including Senate President Donna Frett-Gregory, who questioned why WAPA is paying Ernst & Young $150,000 a month for financial consulting services after recently hiring new executives at high salaries.

“What are we doing here?” Frett-Gregory said during Wednesday’s meeting of the Finance Committee.

“We’re trying to fix the Water and Power Authority, that’s what we’re trying to do,” said Smith.

He detailed the work Ernst & Young has done for the Authority in recent months “to develop our staff as well as put processes and procedures in place regarding our financial management.”

Finance Committee Chairman, Sen. Kurt Vialet, asked if WAPA has a memorandum of understanding with the government to continue receiving subsidies, or “are you just hoping for every month you get the $4 million?”

Smith said the infusions are necessary so WAPA doesn’t run out of cash.

“Because quite frankly if we do not receive that funding, I have three options: option 1 is I stop buying fuel. It’s unacceptable, I won’t do it, but that’s a choice. The other choice we have is we miss debt service, right? And I’m sure if people have rent or have mortgages, you miss your rent payment, your landlord’s not happy. If you miss a mortgage payment, the bank’s not happy,” Smith said. “That quite frankly could take the future of the Water and Power Authority out of our hands.”

The third option “is I could skip payroll,” but it would be “hugely destructive and is something I will not do,” Smith said.

The Authority is working to reduce costs and find savings, but those solutions are not instantaneous so without government subsidies, “our option is three things, and they’re all bad,” he added.