Dear Source:
This is a response to recent letters by both Alex A. Moorhead and John De Jongh Jr. I particularly thank Mr. Moorhead as his letter confirms many of the assumptions below.
Several months ago, I participated in a discussion at the U.S. Department of the Interior in Washington, D.C. where Warren Mosler, a member of the Chamber's Macroeconomic Policy and Development Committee, and I presented our vision for cutting our electric bills in half. Several weeks later, the U.S. Department of Interior arranged a conference call, which included a representative from General Electric who was interested in our proposal. The following were the main points for the discussion:
· St. Croix uses about 60 megawatts of power, as does St. Thomas/St. John.
· Hovensa generates about 125 megawatts of power for its internal consumption.
· WAPA currently spends approximately $150 million per year on fuel oil.
· It is estimated that Hovensa also uses approximately $150 million worth of fuel oil to generate electricity to run the refinery.
· Hovensa produces enough petroleum coke (pet coke) as a by-product of the refining process to provide electric power for WAPA and Hovensa.
· WAPA and Hovensa would each save more than $120 million per year by switching to petroleum coke and/or coal from fuel oil.
· Hovensa would save more than $30 million per year by NOT selling discounted fuel oil to WAPA and instead selling it at a higher price on the world market.
· General Electric indicated that the plant and equipment to generate 400 megawatts of electric power using petroleum coke and/or coal would cost approximately $400 million to construct. (General Electric constructs but does not operate power plants.) This could be done in separate units for Hovensa, St. Croix, and St. Thomas/St. John.
· Hovensa is not permitted to utilize petroleum coke under current arrangements with the U.S.V.I. This restriction was established for environmental reasons that are no longer applicable.
Given the above, our vision is that Hovensa and the U.S.V.I. contract with a company such as General Electric to build new power generating facilities that utilize petroleum coke and/or coal. And, in return for permission to participate in this program, Hovensa would pay for the entire project from the money it would save by no longer selling discounted fuel oil to WAPA.
The result would be a net savings for Hovensa of over $100 million per year for its internal power generation, and a savings for WAPA of over $100 million per year, which could be passed on to consumers as a 50 percent reduction in our electric bills. It would also cut WAPA's cost of water production by more than half.
It was agreed that a plan of action based on the aforementioned points would present a major benefit to all parties involved, especially our local utility ratepayers.
Benjamin Rivera Jr.
St. Croix
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