Aug. 22, 2003- At its Thursday meeting, the V.I. Water and Power Authority governing board gave executive director Alberto Bruno-Vega three directives aimed at securing a new generating units for the authority.
Bruno-Vega said Thursday afternoon the board has requested him to:
— 1, file an appeal for reconsideration with the Public Services Commission of its latest order to cease and desist actions to purchase a new frame six gas turbine for the Randolph E. Harley power plant, Unit 23;
— 2, proceed with contract signature and execution with General Electric for the purchase of Unit 23; and
— 3, file a brief in Territorial Court to properly determine the authority of the PSC regarding this order and to state the statutory rights of WAPA to conduct its affairs.
At its Aug. 15 meeting, the PSC ordered WAPA "to take no further steps to commit to the purchase of a new generating unit for St. Thomas." (See "WAPA, PSC at odds over decision-making power".)
When the PSC agreed in April to a 9.6 percent electric rate increase to back a $70 million bond issue, it was with the condition that the commission would exercise an "unprecedented" level of control over how the money was spent. In executive session at the August meeting, the PSC exercised that control with its order.
WAPA attorney Sam Hall asserted earlier during that meeting that the PSC had already approved the project, and that the commission was trying to "micromanage" the authority. Commission members, however, continued to express concern that the only study done on the frame six unit was completed in 1995.
Speaking after the all-day meeting Thursday, Bruno-Vega expressed his frustration with the PSC's recent action. There are two key issues now, he said: "When they (GE) negotiated prices with them, they based their prices on the currency exchange between the Euro currency and the dollar. The currency has gone up about 15 percent since then. One of the major components of the unit is being manufactured in France; that's why it's so important whether it's up or down," Bruno-Vega explained, adding, "they are pressuring us to sign as soon as possible. We have a deadline: If we don't sign by a certain date, we may lose the opportunity, and the price — currently at $17.5 million — may be hiked up considerably. We need to sign that contract now."
The other issue, he said, is also time-sensitive. "They have placed our unit in the production line, and it will be available by March for delivery. Because of the recent Northeast blackout, all utilities are now looking at what they can do to avert blackouts in the future. There is now a new and high demand for combustion units, Bruno-Vega said. "We are at a critical junction in making this work now. We don't want to lose this golden opportunity."
On the blackout and the immediate need for the new unit, Bruno-Vega said further, "For instance, if certain sectors would have had more local generation, they could have picked up the load faster, and maybe certain sectors wouldn't have gone out. They need to beef up their generator capacity."
He emphasized the need for the new unit to avoid just such a situation in the territory. He said the new unit that we want to install is fast: "It can go from zero to maximum capacity in 15 minutes, a quick response time."
Again stressing the importance of getting the negotiations moving, Bruno-Vega said, "It is now a seller's market for these units, not a buyer's market."
"Our concern is not only that the price will go up, but that delay will place us at the end of the production line. It is a serious reliability concern for the territory."
Bruno-Vega did not discount the PSC. "We believe the PSC has a very important role in rate regulation, but not in the internal operations of the authority. WAPA has a board of nine members appointed by the governor with the consent of the Senate. So you see one constituted body of people overseeing another body that is representing the community. It is bureaucracy at its best."
"Our PSC is an extreme exception to the rule," he continued. You can count with your fingers the municipally owned utilities that are regulated by public services commissions on the mainland. That's because the PSC is tasked to control private utilities — there are thousands, more than 3,000, not regulated by public services commissions. That is why our governing board ordered me to take the three steps I mentioned. Our board has the immediate responsibility for the operation of WAPA."
Bruno-Vega said the new unit is a "turnkey" project, unlike Unit 22, which was manufactured by one entity and installed by another. WAPA has had nothing but problems with Unit 22, which is now in the process of being shipped off-island to Pratt-Whitney for further repairs. WAPA has spent more than $21 million on Unit 22 since it was purchased in 1999.
WAPA is operating on a parallel course with another issue, Bruno-Vega said. It is accelerating its process of a waiver from the Environmental Protection Agency for a construction permit. He said the authority has asked the EPA to consider a waiver to begin constructing Unit 23 while the permit needed to operate the new unit is being considered, "as long as we don't violate the ambient air quality standard," he explained.
"We have worked very closely with the EPA, we included language that will satisfy their concerns," he continued. "We gave the permit waiver application to the governor and he has signed it, so we can start construction of this unit within three to four months and, by the end of calendar year 2004, have everything in place," he said, noting again, "Everything is capital- and time-intensive.
"We expect the permit to be approved. To accelerate the process, we have simulated the emissions of the unit and we feel confident it will meet all regulations. It's long process. We will be holding public hearings where the community can participate — we don't want to wait."
At the daylong meeting the board also approved the authority's fiscal year 2004 electrical, operating and capital budgets.
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