Dear Source:
Here we are almost 10 years later since the Senate failed to consider an offer by Southern Energy to purchase the WAPA generation facilities. Now there are voices asking for the sale of WAPA because of inefficiency. It should be no surprise to anyone that WAPA is a highly inefficient because it is government-owned. There is no incentive for WAPA to consider reducing its workforce because even if it continues to increase its deficit, which it will, the real issue is the way in which it operates. As a government agency, and like all government agencies, the very thought of reducing jobs is repugnant and yet it is a prime reason for its operating deficits. The Virgin Islands serves, what amounts to be, a small city. Yes, we are a combination commercial/residential market but so are most cities. It is rare indeed in democratic societies to see government-owned utilities. In the rest of the world, power production it accomplished by private companies whose only purpose is to make profits and it behooves these companies to be highly efficient. Federal law requires competition in the utilities market. This allows a level playing field for every energy provider and a fair rate for the users of the utility. The only way a company can draw a profit under this system, which was instituted in the 1990's, is to be efficient or risk the loss of an area to serve. In the USA, ratepayers can purchase from any company that provides the best deal so efficiency in operations is tantamount. Here, this incentive does not exist because there is only one electrical provider. The question then arises: Is WAPA defying federal law by not allowing competition on an equal basis? WAPA, thus the government, chose, for many years, to block any additional private companies from entering the energy pool. The government itself–the legislature and executive branches–did nothing to allow any competition with WAPA; a move they could have made many years ago which would have allowed the federally-mandated system of open competition to exist in the Virgin Islands. The issue is jobs. This government, for too many years, has been likened to a job pool where a good paying, high benefit, retirement driven system exists to get people to work. The Virgin Islands government is the largest employer in the Virgin Islands and so with WAPA, the idea is to keep those jobs even though it is an over-employed entity whose inefficiency is legendary.
It is clear that since WAPA has no incentive to make any changes since it has no competition (as of yet), then it never will. Recently, the Virgin Islands government moved to allow private providers to make electricity within the Virgin Islands. Bids have already been taken to bring in companies to co-generate with WAPA but the WAPA (government) rules require that these firms must demonstrate that they can produce power more efficiently than WAPA can. Several private companies were already considered and have shown that they can, in fact, produce more efficiently than WAPA and thus one or more of them could set-up shop here in the Virgin Islands in the not too distant future. The question then is: if they can, then why can't WAPA? The answer could be-they can, now that they have a bit of competition but WAPA rules will NOT allow any company to create more power than a certain, fixed amount, thereby allowing WAPA to still continue, even though inefficient, as the prime provider of electrical energy in the Virgin Islands. The allowance of having co-generation plants is nothing more than a band-aid on a greater problem. Until such time as the federal law comes into play and allows any entity to compete with WAPA for profits on an equal footing, will we continue to have to pay outrageous energy costs. These costs are some of the highest in the world and nearly 10 times the cost of many comparable-sized areas of the USA.
Until power production in the Virgin Islands becomes a private entity, we will continue to fall prey to the world's oil prices, which is the government's only power-producing fuel. We need to completely privatize our energy production, make it much more efficient by greatly reducing fossil fuel use and eliminate the wasteful practices which government agencies such as WAPA are famous for in every area not just energy production. If we as a people fail to recognize or fail to work toward forcing privatization, and away from government-controlled utility, then we can only blame ourselves for our energy woes.
Paul Devine
St. John
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