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PRIVATELY BACKED GENERATOR PITCHED TO WAPA

April 24, 2003 – The Water and Power Authority board heard Thursday morning from another prospective power supplier. WAPA has been down this road before, and the board met the new proposal with skepticism.
Caribbean Energy Resources/Hague International, a joint group, presented its proposal to construct an "externally fired combined cycle" (EFCC) electrical generator which uses "petcoke," or petroleum coke, as its primary fuel. Ernie Zaboltny and Jim Barker of Hague International made the presentation.
The good part for the board is that the proposal would require no investment from WAPA. The project, estimated to cost between $100 million and $190 million, would be privately financed, Zaboltny told the board.
The bad part, or one of the bad parts, is that the financing is not in place, and won't be until the company has a signed contract from a power purchaser — in this case, WAPA. Zaboltny said the project would be financed in part by the U.S. Department of Energy and an industrial consortium.
Another: The technology is not commercially tested. That's also a concern WAPA has had with Caribe Waste Technologies, which has persisted over several years in trying to persuade WAPA to agree to buy power it would produce.
CWT is the administration's choice of company to built a waste-to-energy system to solve the territory's solid waste crisis and supply power at the same time. The proposal presented Thursday has nothing to do with solid waste. It is a process of high-efficiency thermal energy conversion to electric power. Zaboltny said he and Caribbean Energy Resources executives have been scouting sites on St. Croix, where they hope to construct a facility.
Gypsum, carbon steel plants also proposed
They are proposing to build not only the power plant but also a gypsum plant and what they described as a "micro steel mill" producing carbon steel. Zaboltny said Caribbean Energy Resources would use EFCC ash to manufacture the gypsum board. The power facility and the two manufacturing plants would employ 1,200 to 1,500 persons, he said, although the power facility itself would employ very few.
The company has no facility operating anywhere. "This would be the first of a kind; it could make the V.I. famous," Zaboltny said, adding "or infamous." He said the proposition is "risk free," a statement he later retracted under questioning by board member Claude A. Molloy Sr. to "almost completely mitigated."
Zaboltny said there is a "demonstration facility," which he pictured in a PowerPoint presentation, in Kennebunk, Maine. The plant was built for "research and development" purposes, which it satisfied, he said.
Zaboltny stressed the efficiency of the 40 megawatt power plant, which he said is "30 percent more efficient than conventional solid fuel-fired systems."
Alberto Bruno-Vega, WAPA executive director, wasn't impressed. He told Zaboltny that reliability in this island territory is far more important than efficiency. "We have had offers pushed down our throat," he said, "but, reliability is even more important."
Further, Bruno-Vega said, 40 megawatts is too much. "I would not recommend a 40-megawatt unit that was commercially proven for this board — and even less one that is still in the research and development stage," he said.
Bruno-Vega, an engineer, told Zaboltny: "I would rather have three 10-megawatt plants than one 30-megawatt unit."
'A carrot and a stick'
Bruno-Vega likened the company's offer to a "carrot and a stick." "The carrot is the offer of 1,200 potential jobs," he said, "and the stick is we have to purchase something that is in research and development; so if it fails, we would be liable."
He noted that WAPA would have to run its own generators at minimum output to back up the proposed system. "If your system should go down, it would black out the entire territory," he said. He described WAPA's generator and backup feeder system, which protects against a total black-out.
Attorney General Iver Stridiron, a board member, asked Zaboltny if the company had an address, as there was none on its prospectus, and why they had chosen to pitch the Virgin Islands.
Zaboltny said the address is on their business cards (which differed among those present). He said they chose the Virgin Islands because of its size. The kind of power they are marketing can't compete with the large power producers in the states, he said, but "the V.I. market is a perfect fit."
Based on scouting for locations on St. Croix, "I have a pretty good feeling we can site the South Shore," Zaboltny said. Bruno-Vega was skeptical. "There are environmental limits — the South Shore may be maxed out because of Hovensa," he said.
Also, Bruno-Vega said, there is no room on St. Thomas for such a facility. WAPA's Krum Bay plant doesn't have any available space, he said, and the Bovoni landfill probably doesn't, either.
Bruno-Vega asked Zaboltny how he would feel about buying ash from WAPA to run its gypsum plant: "If we could supply that, would you still come here and build the plant?" Zaboltny did not give him a direct answer.
Responding to board members' questions, Zaboltny said the company has not registered with the Lieutenant Governor's Office. Carol Burke, WAPA board chair, asked if he had applied for a permit as a certified power provider from the Public Services Commission. Zaboltny said he hadn't gotten that far yet. He stressed that their visit at this time is "exploratory."
Burke said although the governing board "has always been receptive to pursing diversified resources," she said the board was not prepared to go further with discussions at this time. "I would ask Mr. Bruno-Vega to further discuss the issue with you," she said.
Sens. Norman Jn Baptiste and Raymond "Usie" Richards, both of St. Croix, attended the meeting. Both had met with George Wronge, Caribbean Energy Resources chief executive officer, earlier in the year. Jn Baptiste said they had met Wronge by chance while traveling.
"We met with him, and we were impressed by the potential economic impact for St. Croix," Jn Baptiste said, adding that he felt the project would be environmentally sound. His chief of staff, Alicia Barnes Sylvester, is an environmentalist.
The WAPA board has scheduled a special meeting Monday on St. Thomas to discuss St. John water alternatives, Patricia Blake Simmonds, WAPA public information officer said.
Board members attending the meeting Thursday were Burke, Ira Hobson, Alphonso Franklin, Gerard Luz James III, William Lomax, Molloy, Andrew Rutnik and Stridiron.

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