Aug. 2, 2007 — Several members of the governing majority pledged to direct funds to pay off past due government bills to the Water and Power Authority at Thursday’s Finance Committee budget hearing on St. Croix.
WAPA Interim Executive Director Nellon Bowry gave detailed testimony of WAPA’s financial situation, characterizing it as fundamentally solid but suffering from damaging short-term cash-flow restrictions.
“It’s a question of revenue versus cash flow,” Bowry said. “Bills that have not been paid are counted as revenue, but until they are actually paid, revenue may be up, but the cash is down. … The shortage of cash we have limits the amount of money we spend, affecting everything from maintenance to fuel reserves.”
Compounding the cash-flow crunch, Bowry said, was the large amount of deferred revenue WAPA will eventually receive from the levelized energy-adjustment clause (LEAC), the portion of customers’ bills devoted to paying for the increasing cost of oil to fire WAPA’s generators. The LEAC is determined by the Public Services Commission and is designed to recoup the cost of a spike in fuel prices over the course of a year to 18 months. With oil prices shooting up and staying high for the past few years, the delay between when WAPA pays for oil and is able to charge for that oil has caused temporary cash shortages, too.
“How can the government help you?” Sen. Alvin Williams asked Bowry.
“Be sure to the extent it is possible that funds are funneled properly within government agencies to pay utilities,” Bowry said. “And fund streetlighting.”
WAPA has bled money on streetlighting since the government gave WAPA responsibility for the cost of streetlighting and later earmarked two percent of property taxes to fund it, he said.
“Two percent of property-tax collection is somewhere in the area of $1.5 million,” Bowry said. “The estimated cost of streetlight services is … almost $3 million.”
A bill to increase the levy was vetoed, leaving it at two percent, Bowry said.
“Notwithstanding that, WAPA has been unable to procure the cash from Finance since September of 2005,” he said.
“Any private entity with outstanding balances of 12 to 15 million dollars would quickly go under,” said Sen. Carlton Dowe. “And the government is to blame.”
“You can rest assured we will put aside money for bills,” Sen. Terrence “Positive” Nelson said. “It is surprising to me. We put money toward these bills in the last budget, and they still aren’t doing it.”
Asked what WAPA was doing to move away from oil-based power generation, Bowry said the agency is putting out a request for proposal in September and is looking at between March and June of next year to begin processing an agreement. In the short term, work is continuing on the installation of a waste-heat boiler on St. Croix, which is expected to save $13 to $15 million in fuel annually. WAPA currently spends more than $165 million a year on fuel oil.
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