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Major Purchase Sends WAPA Back to the Bond Market

Oct. 3, 2006 — The V.I. Water and Power Authority will be going back to the bond market to obtain additional financing for the purchase of a waste heat recovery boiler for St. Croix.
According to WAPA spokesperson Cassandra Dunn, the utility currently has $7.9 million available to purchase the boiler — $7.5 million from bonds issued in 2003 and another $400,000 from bonds WAPA issued in 1998.
Even though the utility has been put on negative watch by its bond holders, WAPA would still be able to obtain the additional financing, Dunn said when contacted Tuesday evening. She explained that WAPA has been meeting the debt-service requirements on the 1998 and 2003 series bonds and is "still economically viable enough to do another bond issue."
The boiler will be purchased from Nooter/Eriksen, an independent supplier of waste heat recovery boilers located on the mainland. A press release issued by WAPA on Tuesday stated that the total cost of the boiler "will not exceed" approximately $8.7 million.
WAPA's governing board authorized the purchase of the boiler at an emergency board meeting held early Tuesday afternoon.
WAPA Executive Director Alberto Bruno-Vega said at a recent Senate meeting that the installation of another boiler on St. Croix would save customers between $13 million and $15 million annually.
Bruno-Vega has also said that it would take about two years before the boiler is operational, since WAPA first has to make sure the boiler can be attached to and is compatible with two gas turbines at the Richmond Power Plant.
"The boiler will be attached to units 16 and 20, and we have to make sure it's compatible with those two units," Dunn explained Tuesday evening. "The detailed engineering plan of how this is going to work is moving along; we're about 50 percent complete with that."
According to the release, the engineering plan, the purchase of the boiler and the final installation are estimated to cost from $23 million to $25 million.
Dunn added that WAPA is exploring the idea of obtaining additional financing from the Public Finance Authority for the purchase of another waste heat recovery boiler for St. Thomas. "Presently, we have a boiler on St. Thomas, but if we're able to get the extra funding, then we can have two boilers on each island. That means more savings for the customer," Dunn said.
During Tuesday's emergency meeting, the board also voted to renew WAPA's employee health insurance policy with CIGNA.
The employee health insurance policy, which includes long term disability, life insurance and accidental death and dismemberment, was approved at a cost of approximately $2.66 million.
"This represents an annual increase of 11 percent or $263,681. The increases in insurance, effective Oct. 1, were prompted by increased member utilization and will be reflected in slightly higher deductibles for health care and prescription drugs," the release said.
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