May 8, 2001 – Joseph R. Thomas Jr. of Acworth, Ga., officially took over as executive director of the Water and Power Authority Tuesday morning. He clearly has his work cut out for him if day-long testimony before the Senate Finance Committee is any indication.
Committee chair Alicia "Chucky" Hansen called the hearing in the Legislative chamber on St. Thomas to examine WAPA's financial status, including a memorandum of understanding between WAPA and Innovative Telephone, formerly Virgin Islands Telephone Corp. The committee heard testimony from WAPA, Innovative and local government officials.
A rundown of WAPA's accounts was presented at the meeting's outset. Much of the rest of the day was taken up by probes into the WAPA Governing Board's hiring practices, specifically the selection of Thomas; the executive search company the board hired to find suitable candidates to replace retired executive director Raymond George; and conflicts between the board members themselves, and between some board members and WAPA management.
Maurice Sebastien, WAPA comptroller, spoke on the chronic issue of the V.I. government's indebtedness to the utility. He said the millions of dollars owed "severely impacts the authority's cash flow … which has resulted in the authority's inability to keep current with its largest vendor, Hovensa."
Sebastien provided a detailed account of what the government owes, including breakdowns of the branches and of departments within the branches. As of April 30, the V.I. owed WAPA $25.7 million, he said: $11.9 for electricity and $13.8 for water. He said the situation has forced WAPA to delay "implementing key maintenance and capital improvement programs and the subsequent draw-down of $20 million on a line of credit"
The authority's largest expenditure is fuel, Sebastien said, and the cost to the utility for that has skyrocketed from $31.8 million for Fiscal Year 1999 to $52.7 million for FY 2000 to $52.3 million for the first five months alone of FY 2001.
For the WAPA electric system's $110.9 million revenue and refunding bonds, 1998 Series, he said, $104.2 million is outstanding, of which $3.7 million is current.
For the water system's $44.2 million revenue and refunding bonds, 1998 Series, $42.6 million is outstanding, of which $1.6 million is current.
Testifying for Innovative Telephone, chief executive officer Samuel Ebbesen said he was "delighted" with the memo of understanding, which has to do with burying lines underground. "It allows us to dig one hole, share one trench. It's less disruption for the community," he said.
Ebbesen explained that the agreement allows the two entities to share technical expertise for the benefit of the community in the burying of electrical and communication lines in underground ducts. The project is being 90 percent funded by the Federal Emergency Management Agency as a hazard mitigation project, with the two utilities to pay the remaining 10 percent. There are four areas where the work is being carried out, two on St. Thomas and two on St. Croix.
The memo of understanding cites cost breakdowns for each project. The agreement was signed by Carol Burke as WAPA board chair and Ebbesen as president of Vitelco.
Hansen took issue with the cost breakdown at Tuesday's hearing, saying Vitelco appeared to be getting more advantageous benefits. WAPA board members defended the memo, while WAPA management strongly objected to it. Hansen kept going back time after time to say she didn't understand the cost breakdowns and wanted to see the individual work contracts. Burke kept explaining that the work was ongoing and contracts haven't been drawn up yet.
WAPA engineering director John Christian called the agreement "seriously flawed in the areas of project cost, shared cost and duct-bank descriptions." He said a maintenance agreement clause was "conspicuously absent."
Cost assessments of two of the four projects, those on St. Thomas, should be revised, Christian said. The project that runs from Krum Bay to the Cyril E. King Airport has a duct system for three separate utilities — power, telephone and cable television — he said, so Innovative or its parent company, Innovative Communication Corp., which also owns the territory's two cable-TV companies, should pay 66.7 percent and WAPA, 33.3 percent.
And the utility trench running from the inspection lane to the Texaco headquarters in Sub Base is exclusively owned by ICC and so should be 100 percent funded by the company, he said.
Cathy M. Smith, WAPA general counsel, took issue with several points of the agreement. She said it has no indemnification provision for personal injury and property damage to protect the utility, lacks appropriate insurance coverage and doesn't lay out each party's responsibilities.
Committee members grilled Glenn Rothgeb, WAPA acting executive director until 9 a.m. Tuesday, on his position in the company in view of the fact that he had applied for the executive director position but was not selected, although he has been with WAPA for 23 years in a financial management position.
The senators interrogated the board members at length on why a native Virgin Islander had not been hired for the position, and on several other topics unrelated to WAPA's financial picture — including the price of airline tickets for Thomas to travel to St. Thomas.
Also on the hearing agenda was taking testimony from WAPA employees on their plan to buy out the utility from the government. Members of the employee buyout committee who had been invited to testify sat in the Senate chamber all day, but the committee never got to them.
Committee members present for the meeting were Hansen, Norma Pickard-Samuel, Adlah "Foncie" Donastorg, Carlton Dowe and Douglas Canton Jr. Absent were committee members Donald "Ducks" Cole and Norman Jn.-Baptiste.
Hansen, who along with several other senators had requested more documents from WAPA representatives, recessed the meeting until 6 p.m. May 15 in the St. Thomas Legislative chamber.
