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New Legislation Forces WAPA and PSC to Cooperate

Aug. 11, 2005 – Two previously warring agencies agreed Thursday to work together to meet the deadlines mandated by the Emergency Jobs Creation and Economic Stimulus Act of 2005.
The bill — which had been vetoed by Gov. Charles W. Turnbull, but overridden by the Senate in July — mandates that the Public Services Commission and the V.I. Water and Power Authority choose a certified small power provider on St. Croix by Sept. 30 to supplement and thereby lower the cost of WAPA's exclusively fuel-generated power, which is becoming more costly by the day. Currently two-thirds of ratepayers' electric bills, via the LEAC surcharge, are going to subsidize the rising cost of fuel, something the bill seeks to change.
And just to make things more interesting, in the midst of the scramble to abide by the law, a new power provider has turned up seeking last-minute certification.
Currently there are two companies, already certified by the PSC, who are likely to contend for the contract: St. Croix Renaissance Group and Caribbean Energy Resources Corp. A third entity, Caribe Waste Technologies has also been certified as a small power producer, but is not expected to submit a proposal.
On Thursday, Antilles Energy entered the fray by requesting immediate certification so that it could also vie for the contract.
Frank P. Wilbourne III, president of Antilles Energy, and S. Glenn Farris, chief executive officer of Biomass Gas & Electric, took turns explaining the practicalities of using biomass materials and the methodology used to generate power to run WAPA's turbines.
On its Web site, Biomass explains the process as generating "clean medium Btu gas through the gasification of biomass feedstock. This gas can be substituted directly for natural gas in most applications, including conventional and advanced gas turbines."
The feedstock, in the case of the Virgin Islands, would mostly come from Puerto Rico's fallow sugar cane fields. In other jurisdictions where waste separation practices are in place, organic materials can also be used. The by-product, an ash, can be used to cover landfills, among other things.
Wilbourne said he had already met with May Adams Cornwall, executive director of the newly formed V.I. Waste Management Authority, who had agreed in theory that recycling – which could support the biomass technology — should be explored.
Caribbean Energy Resources would burn petroleum by-products, and Renaissance, which already has a facility built on St. Croix, would use coal to generate power.
However, what Wilbourne wants is beyond the scope of what WAPA is bargaining for. Antilles Energy wants to provide all of WAPA's power, thus entirely eliminating the use of oil.
Wilbourne's idea would involve generating 120 megawatts of power, 60 megawatts more than called for in the bill. His lawyer, Leigh F. Goldman, said compliance could be achieved within the letter of the law by building four plants, each more than a mile apart, and each generating only 30 megawatts.
But there was a lot of talk at the Public Services Commission meeting held on St. Thomas about the "spirit of the law," mostly because almost everyone in attendance was in agreement that the law was ill conceived and impractical.
"The law as it is was poorly written and full of inconsistencies," WAPA Executive Director Alberto Bruno-Vega said, adding that the authority nevertheless had to comply.
Under the law, if more than one entity submits a proposal to provide power to WAPA, the PSC has the final word on who is chosen. Meanwhile WAPA must receive and review the proposals and conduct any negotiations that would change the initial proposals by Aug. 31. Once that is completed, the PSC has until Sept. 30 to make the final choice about which company will supply the supplemental power. The PSC and WAPA reached an agreement in private Thursday whereby WAPA would work on negotiations through August and submit the proposals to PSC at that point for review. WAPA agreed to hand over any additional information or addendums to the proposals to PSC as soon as received.
The time lines are not the only impracticalities of the bill. It also requires the small power provider to permanently employ 400 workers. Currently WAPA only employs 100 people in its power generating plants on St. Thomas and St. Croix – 50 in each, Bruno-Vega said Thursday.
Again, Wibourne invoked the spirit of law, saying he suspected the intent was to also include workers employed in support services.
But among his concerns, Bruno-Vega wanted to know what would happen to the 100 workers if WAPA stopped producing power altogether and also what would happen when the power producer's equipment broke down or was taken down for routine maintenance.
Wilbourne said WAPA would be expected to provide backup on those occasions. But Bruno-Vega wanted to know what he workers would be doing in the meantime, "sitting around twiddling their thumbs?"
At that point discussion was steered back to Antilles' bid for certification. The commission agreed to meet next week to address the request.
In other agenda matters, commissioners also postponed making a decision on the hearing examiner's recommendation on street lighting, which was to suspend the surcharge immediately since the first two phases of the street lighting project were complete.
Jamshed K. Madan of Georgetown Consulting Group didn't agree to the solution, however. He said since Phase I of the project was complete and Phase II was nearing completion, Phase III was expected to start up the first of the year. He said the scope of the work of Phase III should be assessed before eliminating the surcharge, which is .002 cents per kilowatt.
According to both Madan and PSC consultant Larry R. Gawlik, the simple use of debits and credits to assess the street lighting funds is too simplistic.
Bruno-Vega maintains that the surcharge is double taxation, however. He said the responsibility for street lighting should be "dumped back on the government." He said, ratepayers pay taxes for infrastructure and then pay again in the form of the surcharge.
WAPA's battle over street lighting goes back to late 2001, when the responsibility for the territory's street and area lighting moved via legislation from Public Works to WAPA. At that point the struggle began to find funding to support the responsibility and has gone on since then, with Bruno-Vega relentlessly pushing to have Public Works take back the street lighting program. The surcharge matter will be taken up again at September's meeting, which is tentatively scheduled for Sept. 8.
WAPA's bid to increase its self-insurance fund cap from $6 million to $10 million will also be addressed at that meeting. The self-insurance fund is also supported by a surcharge of .002 cents per kilowatt, which is to cease when the fund reaches $6 million. It is currently at $7.1 million, according to WAPA officials. But with hurricane season moving into its most active month, September, Bruno-Vega said it was imperative to increase the cap in order to have a reserve of fuel on hand in the event of a storm. He also wants to use $4 million of the requested increase to fund the installation of underground power lines in parts of Christiansted and Charlotte Amalie.
On other matters, Gawlik reported that the addition of a new heat-recovery boiler on St. Croix was 18 to 24 months away from start-up. Once in place, the recovery unit is expected to generate savings on St. Croix of $13 to $14 million a year, he said.
Bruno-Vega said he would like to see one on St. Thomas as well. "Maybe this commission needs to find a way to finance a backup heat recovery boiler on St. Thomas," he said, adding that maybe a surcharge like the LEAC (Levelized Energy Assessment Charge) could be implemented to fund the acquisition. That discussion went no further.
Gawlik also talked about WAPA's "avoided costs," generated by the heat recovery unit
and the small power provider program, but said assessing avoided costs was complicated. "Avoided costs areas need a lot of work before any conclusions are reached."
Commissioners in attendance at Thursday's meeting were, Jerris Browne, Verne David, Valencio Jackson, Alric Simmonds and Alecia Wells.
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