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WAPA Board Struggles with Mounting Debt, Fuel Costs

July 28, 2006 -The Water and Power Authority's cash flow problem is "dead serious" and remedies must be put in place immediately, according to Executive Director Alberto Bruno Vega.
"We are accused of crying wolf, but things are very bad for WAPA," said Bruno Vega. "The wolf is at the door."
He said the authority's "working cash" is $3.5 million in the red. "We cannot pay our obligations to GERS, Internal Revenue and many other crucial providers of service and material," said Bruno Vega "We are drawing down the last pennies to pay for fuel."
WAPA's budget is based on expected revenue, he said, but while the authority pays its debt to the fuel provider – Hovensa – it is not reimbursed by the customers.
To counteract rising fuel costs WAPA's Governing Board voted Thursday to remove "spinning reserves" during nighttime hours to save on fuel. Bruno Vega said removing the spinning reserves would impact the systems' reliability by limiting the available power to exactly what is needed to provide electricity to the territory.
Bruno Vega said St. Croix requires 35 megawatts of power at night, while St. Thomas requires 50-55 megawatts of power, but the authority normally provides more power as a back up in case of operational failure. If a power source fails, additional power would be engaged. However, the possibility of nighttime power outages may increase.
The removal of the spinning reserves will take place immediately, Bruno Vega said.
The board also approved a fuel hedging program as insurance against the high cost of fuel. (See "WAPA Board Approves Fuel Hedge Plan").
The board said much of the debt can be attributed to overdue bills. The authority has been wrangling with several government agencies for nonpayment of their electric and water bills.
According to figures provided by the board, the central government owes the authority $7 million in electric bills and $1.3 million in water bills. "Most of those bills are current," said Board Chairman Daryl Lynch.
Government instrumentalities including semi-autonomous agencies owe $5.9 million in overdue electric bills and $1.4 million in water bills. Topping that list according to the board is the territory's public hospitals.
Despite a memorandum of agreement signed by the Juan F. Luis Hospital to pay its overdue electric and water bills of $4.6 million, only a partial payment was made and the agreement is presently in default.
The Roy L. Schneider Regional Medical Center is $975,000 in debt to the authority.
Lynch said the board is aggressively exploring ways to address the escalating cost of electricity. Although he declined to be specific, Lynch said board members are engaged in ongoing discussions with both Hovensa and the Venezuelan government to reduce the cost of energy to the consumer.
In other action Thursday the board re-elected Lynch as chairman and Cheryl-Boynes Jackson as vice chairman. Yolander Deterville was elected as secretary. All officers serve one-year terms.

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