May 1, 2007 — In a long, and at times, acrimonious meeting, the Public Services Commission (PSC) voted to approve the Water and Power Authority’s (WAPA) request for a future $1 surcharge on utility bills to help pay for the Waste Heat Recovery Boiler project on St. Croix.
The surcharge will be implemented either when the boiler project is 90 percent functional or by October 2008, whichever is later. The surcharge is expected to generate $1.8 million that WAPA will use to back the bonds for the project, which is designed to generate additional electricity by utilizing the exhaust heat from two existing gas turbine-powered generators.
WAPA maintains the surcharge is needed to assure bondholders. “Bondholders don’t go on promises,” said WAPA Executive Director Alberto Bruno-Vega to PSC members. “We need your support.”
The bond will provide WAPA with the necessary capital to prepare the foundation and site for the steam generator, which is already under construction off island.
Exactly how WAPA will be financing everything is somewhat complicated. First, the authority is taking the proceeds it has leftover from the 1998 series bonds — roughly $90 million — and using a portion of it — about $40 million — to pay off on its other bonded debt.
The remaining amount — about $50 million worth of bonds — will be refinanced at a lower interest rate.
Secondly, WAPA will be issuing $57.1 million worth of new bonds to pay for the heat recovery boiler, the repairs, and a $10 million line of credit.
The new bond proceeds will be allocated, in part, to the following projects: $24.1 million to the boiler project, $7.5 million for Randolph Harley Substation repairs, $3.5 million for Unit 13 repairs, $2.1 million for tank repairs for Unit 13, and $1.9 million for repairs on the Long Bay Substation.
Bruno-Vega indicated that the boiler project could possibly be functional by July 2008, after which ratepayers can expect a yearly savings of just under $90.
Some PSC commissioners expressed a sense of déjà vu over the project. Commissioner Donald Cole said that WAPA had not been held accountable for past failures, noting that in 2003 WAPA had allocated $10 million for the boiler project and had failed to build it.
Since that time, the boiler project's price tag has risen to $32 million. The delays have resulted in a lack of reliable service and had a severe impact on ratepayers’ bills.
According to WAPA officials, paying off the series 1998 Bonds at a more favorable rate will produce an estimated annual debt service savings of $200,00, which the PSC mandated be used for line-loss reduction, maintenance management and a feasibility study on connecting the electrical grid between St. Thomas and St. Croix.
PSC members Wells, Cole, Joseph Boschulte, Sirri Hamad, M. Thomas Jackson and Raymond Williams voted to approve the funding, while David voting against the measure.
In other business, the PSC granted an eight-month extension to the Waste Management Authority (WMA) in its search for a hearing examiner and consultant to review an application for an environmental user fee.
WMA filed the application at the end of March, and by law, the PSC must act upon it within 30 days. Without the extension, the rates would take effect automatically.
PSC is now reviewing consulting firms to evaluate the proposed fee structure and will select one by the third week in May.
The environmental user fee must be approved by the PSC and is applied to anything that will end up in a V.I. landfill.
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