Dec. 5, 2001 – "One WAPA … One goal … Satisfied customers." This is the sign you see upon entering the Water and Power Authority's offices these days, and Joseph Thomas, WAPA's executive director, is determined to turn the credo into reality.
The slogan expresses Joseph's vision for WAPA, and six months into the job as its chief executive he is fast implementing a new aura for the old utility — which once inspired Carnival T-shirts reading "God said let there be light, and WAPA said no."
Thomas said WAPA over the years has been slow responding to public demands for better service largely because it has been strapped by a monumental government debt in delinquent accounts. This was a major challenge he faced in June when he left his own utility consulting firm, J.R. Thomas Associates, and moved from Atlanta to the Virgin Islands accept the executive director post.
With a strong background in marketing and utilities management, research and development, he began by advancing ideas and incentives to augment the authority's 2002 Strategic Plan, a planning process initiated by the WAPA board a year ago.
The debt problem was huge, but other problems were not far behind. The Senate passed legislation to give early retirement to certain hazardous duty employees, which Thomas has described as "a mistake we'll all pay for." And the administration handed WAPA a waste-to-energy plan calling for the utility to buy electricity and water from another entity that it could just as well produce itself — a plan Thomas said could down the road put the utility under. Despite pressure from Government House, Thomas and the board said "no" — effectively scuttling the plan.
At the moment, WAPA is poised to take over responsibility for the territory's street lighting from the Public Works Department, but there are problems here, too. Thomas disagrees with the Legislature on how the additional work for the utility should be funded. He says he can have all 8,000 of the territory's street lights working within 18 months and keep them that way, but he wants the public to pay for it with a surcharge of about $1.80 a month on electric bills. The Senate Finance Committee says it should be funded through annual government appropriations.
The utility came close to being privatized in large part last year, with a Georgia company, Southern Energy Inc., proposing to purchase everything but its distribution system. But the Legislature rejected the deal in August of 2000. SEI wanted to purchase 80 percent of WAPA for a set term of years and give the utility enough money to pay off its debts. The community came out in numbers to protest the sale, declaring WAPA everything but a cultural treasure, and the Senate, after long and frequently hostile debate, rejected the deal.
Most old bills paid but new ones piling up
In the last six months, Thomas has managed to wring most of a seven-year, $27 million debt in delinquent accounts from the government. However, "to this day," he said in a recent interview, "a couple million dollars as of pre-May 31 has not been paid — and, in the interim, the government has fallen behind. We have had to send out another rash of letters threatening to disconnect." He quickly added, "We have not disconnected anybody — yet."
The government payments were made with a combination of cash and the retirement of a $3.5 million WAPA water plant obligation. Thomas recalled remarks he made earlier this year praising Juel Molloy, the governor's chief of staff. "Without her cooperation, we couldn't even be where we are now," he said, noting that Molloy has coordinated the various government agencies' payments.
Thomas has high hopes for WAPA, which he often refers to as "the company." "We are trying to get this utility back on its feet," he said. "I know there are people who think all is well, that the government's payments have solved all our problems. Nothing could be further from the truth."
WAPA, he said, "has been cash starved for such a long time that the parts of the company that needed cash in the past are like sponges now, soaking up every dollar we can find. We're a little short on our capital budget requirement for this year because we haven't collected all the money we expected from the government." He said a lot of the money collected has gone to replenish the utility's debt-service reserve fund.
For the time being, the utility has been able to forestall a rate increase. "However, Thomas said, "we have equipment that is completely out of its maintenance cycle. A perfect example is the islandwide outage [on St. Thomas, with impact on St. John] we had about three weeks ago. One of the bushings failed on the Unit 13 transformer. It's an extremely old piece of equipment, and that's what you wind up with when you starve a business. You don't have the money to buy a new piece of equipment and do maintenance on what you have; so, you rob your maintenance budget to provided cash flow to the business. That money that should have been provided by people paying their bills."
Thomas shook his head. "This whole perception that WAPA is on good financial footing is false. It will be another two to three years before we are in a fiscally strong position."
He continued, "We are making progress. I don't want to give the impression we've allowed the utility to fall into disrepair. But we have had to neglect a lot of capital projects over the years. We will be having outages we shouldn't have, but we're working hard to keep them at a minimum."
Strong utility an investment incentive
Thomas's thrust for WAPA is a comprehensive long-term plan. With his background, he tends to see things in a measured manner that he says will pay off down the road.
"You have to have a strong utility," he stressed. "That's a thing outside investors look at right away. No investor will come to a community that can't provide reliable service. It's essential for the economy."
His view is that, "If we can establish a culture where we are getting paid as we should and don't sign onto any commitments where a stream of revenue is uncertain, we will be fine." That, he said, "is precisely why we are taking a stand on street lighting. We are looking at things in the long-term perspective. If we are going to have a stable, well-funded, healthy utility, we can't leave ourselves open for things that will get us in trouble."
Given the difficulty in collecting past-due bills from the government, he is not willing to commit WAPA to take on the street lighting on the basis of proposed annual government appropriations. He believes residents would be "willing to fork over a couple dollars a month for first-class service. That's the feedback I've been getting."
If WAPA is forced to accept an annual appropriation as the basis for taking on the work, he said, "We will set up the lights as a contract business. And if we don't get the appropriation, we will furlough the employees and park up the vehicles which we would have contracted. We cannot cross-subsidize this business and take money from the struggling water and electric business. In fact, we are prohibited from doing that by bond covenants."
WAPA avoided being put in a position of having to accept the government's proposal with Caribe Waste Technologies, selected by the Turnbull administration earlier this year to build a $180 million gasification waste treatment facility on St. Croix that would serve the whole territory. The agreement was contingent on WAPA committing to spend some $12 million a year to buy electricity and water over 30 years from CWT — power and water which the utility's management said it didn't need. In a November meeting, the WAPA board voted down further discussion on the project.
Commercially, "the technology isn't proven," Thomas said of the CWT proposal. "We had the facts and they didn't. They weren't ready to come to us. The facts are irrefutable, and you can't run away from the truth. I think the board did the right thing."
Then, there's the matter of the early retirement legislation. The governor vetoed the bill passed by the Legislature, but the lawmakers recently overrode the veto. The law mandates early retirement — i.e., after 20 years — for WAPA employees in certain high-risk jobs. No other utility "on the face of the earth that I know of has that kind of plan," Thomas said. "It's a bad idea. There are certain risks you take on as part of a job, and you are compensated for those risks. If the job is OSHA [the federal Occupational Safety and Health Administration] compliant, the employee is already covered by a compensation package."
A lobbying group formed last month by former senator Hugo Dennis, Advocates for the Protection of the Retirement System, agrees that the law will do more damage than good. It has initiated a recruitment drive for government employees and is circulating a petition to the Senate to repeal the WAPA early retirement legislation. "I wish them success," Thomas said, smiling.
St. John water-quantity problem 'virtually solved'
Thomas said recent drops in the world market price of fuel is good news for WAPA customers. "We have a very favorable arrangement with Hovensa on St. Croix under which we purchase our refined fuel at crude oil prices, a dramatic savings compared to the market price," he said. The price WAPA pays has dropped from about $32 a barrel to about $25 a barrel within the last year, he said.
"It's our expectation that the decline in oil prices will have an effect on the LEAC" — the levelized fuel adjustment clause, Thomas said. The adjustment, a surcharge on monthly electric bills, was introduced when oil prices were fluctuating widely. "It may fully offset any rate increase," he said. However, he added, "We may have to go in for a rate adjustment [upward] to get the system back in shape."
Last summer, he said, "we were advised by the Public Services Commission that we should complete a rate study before we present the findings, as support for a rate adjustment. Should there have been any overpayment by customers in the interim, they will be refunded."
Water is a big problem. "We still have too much water unaccounted for. That's a problem at the top of our efficiency planning group's agenda."
The good news, he said, is that "we have virtually solved the water-quantity problem on St. John. Without proper storage, we will not truly solve it; there'll be some rationing. But the quantity is getting under control. We have added a new intake pipe that boosts production by 80,000 gallons a day. The next step is to improve the quality, the taste of the water. It's not what people would like to have."
He said the long-term solution will involve building a substation on St. John and laying several miles of pipe on St. Thomas to transport the water.
For Thomas, a major WAPA accomplishment this year has been getting Unit 22 up and running, something in the works for many moons. The unit has been successfully tested and is proceeding through its commissioning process. Unit 22 generates 23 megawatts of electricity, which means "we can meet our peak demand with our two largest units out," he said with obvious satisfaction.
Another accomplishment in which he takes pride is the near-completion of burying designated power lines underground, part of a disaster mitigation project funded with post-Hurricane Marilyn grants from the Federal Emergency Management Agency. "On St. Croix, feeders from the Richmond power plant to the hospital and the Rohlsen Airport are substantially complete," he said. "On St. Thomas, feeders from the Krum Bay plant to the hospital are almost complete. The airport feeder was finished earlier this year."
When Thomas took over as WAPA chief executive in June, he said he saw a lack of good communication with the public as one of the authority's major problems. "We want people, the media, to know what we are doing," he said in June. "An executive director as a channel to the public is not enough. We need public affairs people to say what is going on, to 'turn the light on'."
Thomas has succeeded in turning on some lights. He has reorganized the utility into nine divisions designed to carry out the principal functions of the overall strategic plan, with a senior management team, approved by the WAPA board, in place since September.
Improving employee and consumer relations
Communication and customer service go hand in hand, Thomas said. Cassandra Dunn, the utility's St. Croix personnel manager for 10 years, now heads the communication division. Dunn and Thomas have instituted a far-reaching program involving all WAPA employees.
"We have a 'WAPA day' about every four months," Dunn said. "We, the senior team, along with Mr. Thomas, visit all our departments and listen to what the employees have to say. At first, they didn't know what to make of us." She said the team members ask employees what their main concerns are. Safety and security are high among the line and production workers, she said. "And with the customer service representatives, it was easy – telephones!"
Dunn and Thomas readily agree WAPA's phone system is antiquated, and there are plans to update it soon — and to acquire video conferencing capability. "We're 20 years behind the states," Thomas said. "These aren't new technologies. If we had video conferencing, we could probably save $2,000 a week in air travel between the islands. The system would pay for itself in the first three months." He declined to give details, saying only, "Soon."
Dunn said, "We celebrate self-improvement in the employees, levels of commitment. It's not enough to be just a 'good' employee. We have a list of top 10 characteristics including a strong work ethic, high level of job knowledge and willingness to take responsibility and represent the authority well to the public."
One could see signs of good employee relations upon walking into the WAPA executive offices in Sub Base recently. Bright gold balloons hung from the light fixtures. "We had a reception for our accounting employees, about three dozen of them, who worked day and night and weekends to get our government delinquent accounts ready to submit," Thomas explained. "They went through each account by hand, and that is dedication."
Thomas has instituted a "Key Accounts" program which he said will improve relations with both private and government customers, as their officials deal with one WAPA representative knowledgeable and sensitive to particular problems in their area of power consumption. "We will instruct in energy conservation, water rationing, any number of means to help customers keep costs down – it's an energy outreach endeavor which will help our customers as well as ourselves," Thomas said.
Another goal is youth development. "We don't give to civic groups," Thomas noted. "We have a good scholarship program, and we focus our energies on creating opportunities for young people to be aware of employment opportunities." WAPA finances college education for those willing to return to work at WAPA after graduation. The utility will donate the first fill-up for the new Community Aquatic Center swimming pool on St. Thomas, scheduled to be completed next year.
Thomas plans to have a WAPA forum once each month at a local hotel where board members and rank and file employees can exchange ideas. "You leave your rank at the door" is how it will work, he said. H
e said he participated in a similar program in the states once which was "extremely successful" in initiating new ideas and in improving company relations. In fact, he said, "I would like to see a V.I. community forum along the same lines. I've talked to Channel 2 TV host Michael Bornn about it."
In Fiscal Year 2002, which for WAPA began on July 1, the utility will try to hold electric and water rates at their current levels and to issue no new bonds, Thomas said. But timely government payments are critical to achieving those goals, he added. In Fiscal Year 2003, he said, a more aggressive long-term debt program is expected to fund a comprehensive capital improvements program including enhancements to plants, transmission and distribution systems, financial and customer-service software systems and, not least, the utility's telephone and computer systems.
When asked what his No. 1 achievement has been in his first six months on the job, Thomas didn't think twice. "Beginning to see the light of hope in the eyes of the employees, a sense of purpose," he said.
Those government account collections, of course, run a close second.
