V.I. Water and Power Authority board members gave the green light Thursday to a loan refinancing that officials said could lower Levelized Energy Adjustment Clause (LEAC) rates by a net 3 to 4 percent.
The authority would be refinancing its existing $40 million electric system general obligation note, for which the current balance is $26 million. Pushing the total back up to $40 million would yield $14 million in new money, which could then be used to replenish WAPA’s Self-Insurance and Hazard Mitigation Fund and cover close to $3 million worth of damage from Hurricane Earl, according to WAPA Chief Financial Officer Nellon Bowry.
During the board’s monthly meeting on St. Thomas, Bowry explained that the extra cash would also help the authority get current on its fuel inventory payments and extend its deferred fuel cost recovery schedule out to 36 months, which will drop rates during the next LEAC cycle.
WAPA board member Gerald Groner joked that the rate reduction be used as the main selling point for senators, who, along with the governor, have to approve the refinancing.
WAPA’s Self-Insurance and Hazard Mitigation Fund pays for the authority’s emergency fuel stores during hurricane season. The fund was tapped in 2009 but not replenished, since cash was tight, Bowry said.
"But now we’re once again in the middle of hurricane season with our main fund depleted," he said, adding that the fund’s current balance is $3.3 million — $1.6 million of which is committed as a match for Federal Emergency Management Agency funds needed for the ongoing Charlotte Amalie undergrounding project.
If the refinancing goes through, $8 million will be used to top off the fund. Bowry said he anticipates the terms of the refinancing to stick close to the existing ones, which include a 5.5 percent interest rate and an amortization period of 60 months.
Technically, the money used to pay for damage caused by Hurricane Earl might be reimbursed by the federal government, but there’s no word yet on whether the territory has officially been declared a disaster area. While some board members said they’ve heard the reports are favorable, Bowry said that until a determination is made, the WAPA team will be compiling the necessary information and paperwork.
Officials said after the meeting that while Earl wasn’t a direct hit, the territory did see winds of 100 miles per hour or more, which caused extensive damage to WAPA’s equipment, particularly on St. Thomas and St. John.
Most of what’s been reported is line damage, but the immediate objective after the hurricane was to restore power, so some preliminary fixes were made that now need some permanent work, such as cracks in the poles, Bowry explained.
WAPA engineer Clinton Hedrington said during the meeting that crews are still out and about doing spot repairs and last-minute assessments that would help complete the paperwork for FEMA.
Meanwhile, power outages that wracked St. Thomas this week can be attributed to the loss of Unit No. 23 — a 40-megawatt turbine at the Randolph Harley Power Plant that WAPA Chief Operating Officer Glen Rothgeb said has gone into "full cardiac arrest."
The unit is currently down and parts have been ordered, but the turnaround time on repairs looks to be about the end of October, he said, adding that otherwise, the authority is operating on "very little backup."
Work is ongoing to Unit No. 11, which, as of Wednesday, could hold about 20 megawatts; and Unit No. 13 is working, but producing only about half its load, Rothgeb said.
"So it’s pretty tight on St. Thomas, but after about four weeks, we should be a little more out of the woods," he added.
Moving quickly through the action items on their agenda, board members approved:
-a 76-day extension on a security fencing project at the Richmond Power Plant; and
-an approximately six-month contract extension with GE that would cover the time needed to complete a major overhaul of a gas turbine at the Richmond Power Plant, along with a change order for the extra work totaling $213,798 (the additional change order puts the total cost of the overhaul up to $1.7 million).
Board members present Thursday were Brenda Benjamin, Wayne Biggs, Sandra Boynes-Jackson, Groner, Kenneth L. Hermon, Noel Loftus and Robert Mathes.
