In his recent letter to the Source, Marty Freeman stated that, when Crucians are protesting WAPA and the high cost of electricity by marching downtown, they also should go to the gates of HOVENSA and wave their WAPA bills to Let HOVENSA know [it] should do more to help us.
HOVENSA is the largest contributor to the Virgin Islands economy. The refinerys owners pay full corporate income taxes, resulting in payments of approximately $90 million to the V.I. Government in 2007. In addition, last year HOVENSA had a payroll of $106 million, paid approximately $14 million in real property taxes, $6 million in gross receipts taxes and $3 million in export fees. Further, WAPA saved approximately $36 million as the result of paying HOVENSA below market prices for fuel oil. No other company even comes close to HOVENSAs contribution.
Even though WAPA achieves substantial savings on fuel oil purchases from HOVENSA, WAPAs power rates are the highest in the United States due to the Authoritys reliance on fuel oils to generate electricity.
According to the Electric Power Monthly for August 2008, published by the Energy Information Administration of the U.S. Department of Energy, only 1.1% of electric power in the U.S. is generated using fuel oils as its energy source. The largest percentage of power, 49.5%, is generated using coal as the source of energy. According to the same publication, the average price paid by U.S. utilities for fuel oils in May of this year was $16.44 per million Btu. A Btu, which is the abbreviation for British thermal unit, is a measurement of heat. The average price paid by utilities for coal was only $2.08 per million Btu, almost one-eighth the $16.44 per million Btu paid for fuel oils. To put this in better perspective, last year WAPA paid HOVENSA $170.3 million for fuel, including the cost of delivery. If WAPA were using coal instead of fuel oils last year, its fuel bill would have been approximately $22 million, plus the cost of shipping the coal to WAPA from the U.S. mainland or South America.
In HOVENSAs opinion, in order to substantially reduce the cost of electric power for residents and businesses in the Virgin Islands, WAPA needs to change its source of energy. Unfortunately, this will take time, and it will require the investment of many millions of dollars to build new power generation equipment because the existing oil-fired generators cannot be converted to coal-fired units. As a member of this community with more than 1,000 employees who are directly affected by WAPAs electric rates, HOVENSA encourages the development and implementation of such a program.
HOVENSA believes that this is the only solution to the high cost of power in the Virgin Islands. While the company does not produce coal, it produces petroleum coke, which is comparable to coal as a source of energy and generally sells at a price slightly lower than the price of coal. The average price paid for petroleum coke by U.S. utilities in May of this year was $1.94 per million Btu, 14 cents per million Btu cheaper than coal. HOVENSA stands ready to supply petroleum coke to WAPA.
Alex A. Moorhead
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