Some members of the Virgin Islands Legislature have expressed their intent to introduce legislation to stabilize the cost of electricity. Legislators should define the limits of their stabilization idea. What do they really mean? While the idea sounds good, especially to the residential consumer and good for election year politics, I opine that the promoters of the idea forgot to tell the people the real facts of life. They have forgotten that the world's oil market prices moves upward everyday and no government can control oil prices. Even HOVENSA, which refines most of its crude oil from Venezuela, cannot freeze prices indefinitely. The proponents of price stabilization should employ an economist who can give them the facts as they really are in today's oil market. Economists are now saying that with the middle-east crisis, and BP Oil Company cutting production, we can expect to see crude prices at or around $100 per barrel.
Right now, WAPA is in financial straits and the situation could become worse. Electricity is a most essential component of daily living in the world and the Virgin Islands is among the consumers of electrical power, which propels its economy. The islands are not excepted.
Legislators should convene in session and commence the process of finding the means of pulling WAPA from the jaws of bankruptcy. WAPA is a quasi-government agency and must not be left in the cold to swim for itself, albeit it has a governing board. The residential and business consumer will be hurt severely if nothing is done. An energy conservation program should be instituted and the government, which is the largest consumer, should take the lead. Homeowners should join the program as well as businesses. An energy conservation plan should advise everyone how to cope and manage with reduced consumption. Additionally, all consumers should help WAPA by paying what they owe on a current basis and especially, The Government of the Virgin Islands. Consumers should also be reminded that WAPA has a large outstanding debt in the form of utility bonds (for plant modernization and new equipment) which must be repaid from revenues generated from the sale of electricity and stabilizing what WAPA must charge for electricity could be held as a material breach of he bond covenant. The terms of the bond covenant will not allow WAPA to charge less than its actual cost of doing business, and of course, the central government is not expected to appropriate subsidies to the Authority.
Eric E. Dawson
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