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Tuesday, October 4, 2022
HomeNewsArchivesWHO WILL BUY WAPA?


When WAPA's Governing Board met on Wednesday, July 21, the three cabinet members, with the help of two others, ram-rodded through a Government House request that SEI (Southern Electric International, a subsidiary of the giant utility, the Southern Co.) be given an exclusive 60 day period for a "due diligence" examination of the Authority, preliminary to a formal offer to purchase. This was in total disregard of the fact that at least two other giant utilities have expressed interest in buying WAPA. What's wrong with a level playing field, open to all?
The previous administration first put WAPA into play. It paid an "independent" consultant $500,000 out of Public Finance Authority (PFA) funds to come up with a sales proposal. An additional $125,000 was payable to the consultant should WAPA actually be sold. The independent study was fatally flawed in that Water was almost completely ignored. Yet production-wise, Water and Electric are so tightly integrated that it's impossible to buy one system without the other. Let's hope the next group of consultants understands that.
By the way, isn't it wonderful that Government House through PFA has millions of dollars of interest from bond proceeds awaiting expenditure, under its control for which it's accountable to no one.
Finally if SEI, actually gets to acquire WAPA, it may have shot itself right in the foot. That's because, given the SEI "hold", WAPA's Board delayed approval of the purchase of the new gas turbine. That 23-megawatt unit is desperately needed to meet the St. Thomas peak load being experienced right now. To put it simply, until additional capacity is finally installed, if and when the two largest units break down simultaneously.
St. Thomas has nowhere to avoid rotating outages. And these may go on for weeks.
Finally, no one has yet come up with the answer to the biggest obstacle to any WAPA sale. Presently WAPA has nearly $200 million of outstanding tax exempt bonds. Any new buyer has to refund these almost instantly upon acquiring WAPA. That's $4 million a y ear of additional yearly costs the buyer would have to assume, and then seek to pass on to local rate payers.
Good luck fellows, You've got a tough row to hoe.
Editors' note: Hans Loeffler is a CPA who served two four-month terms as acting director of WAPA and six years on the board.

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