June 22, 2001 — The employee-organized Water and Power Authority Buy-out Committee has been quietly moving ahead with its 10-month effort to purchase the utility and is hoping to receive $200,000 from Congress to help fund a feasibility study.
The committee was formed last year after Southern Energy approached the Turnbull administration with an offer to buy WAPA. While the administration was in favor of the company’s $400 million offer, the Legislature, with the encouragement of many WAPA employees, shot down the deal last August.
While Southern Energy’s proposal was being debated last year, WAPA’s unionized employees, headed by Hubert Turnbull (no relation to Gov. Charles W. Turnbull), formed the buy-out committee.
The committee wants to offer the government a competitive bid to retain local ownership of the utility in the form of a cooperative. It has been working with three mainland companies — Shay Kimble Consulting Group, Praxis Consulting Group and the financial firm of Houlihan, Lokey, Howard and Zukin to develop its takeover plan.
"We’ve been working since last August pursuing different avenues of financing with the assistance of our consultants," Herbert Turnbill said. The first task, he said, has been to "put together a feasibility study on what it would take" for WAPA "to become an employee- or consumer-owned cooperative, or a combination of both."
Southern Energy had a months-long due diligence period before it offered to purchase 80 percent of the government-owned utility for almost $400 million, including $105 million in cash up front. The deal also called for the company to provide about $2 million in economic development funding and write off the government’s overdue utility bills, which then stood as more than $20 million.
Hubert Turnbull said the committee sought private and federal funding for its feasibility study, including donations from WAPA employees. With the help of Delegate to Congress Donna Christian Christensen, it lobbied the Interior Department for $200,000 toward the study, he said.
That request was approved by the House Appropriations Committee last week. It must be approved by both houses of Congress and the president in order to become reality.
"Our first step after the defeat of the sale to Southern Energy was to secure funding for the feasibility study, which would examine how to structure a transaction that meets the government’s primary objectives while better protecting the broader economic and social interests of our community as expressed by many concerned citizens during last year’s campaign for the sale," Hubert Turnbull said.
As the plan currently stands, the cooperative would be managed by a board suggested as 11 people -– four from WAPA, four from the business community and three residents. It would be empowered to secure loans from the National Rural Electric Cooperative Association and the Cooperative Finance Corp.
By paying a minimal fee, residents would become co-op members and essentially co-owners of the utility, once it was purchased from the government. They would have a say in how it is managed, including voting for the board of directors.
Through national associations, the co-op would have access to low-cost capital, management expertise and storm insurance, among other things.
Cooperative ownership of electrical utilities in the U.S. dates back 64 years. Cooperatives now own 930 utility systems in 46 states and serve some 34 million customers, 12 million of whom own a share of the utility from which they purchase their power, according to the National Rural Electric Cooperative Association.
Hubert Turnbull said the buy-out committee hopes to make a proposal to the V.I. government "in the near future." Meantime, he said, it will hold a press conference on July 5 to detail its plans.
