Hugo Hodge, executive director of the V.I. Water and Power Authority, told members of the governing board Friday that he had approved the engineering design for construction of industrial propane storage tanks on St. Thomas and St. Croix, and the authority’s conversion to the lower cost fuel was progressing on schedule.
Hodge said the tanks would be located on the premises of the two power plants on St. Croix and St. Thomas and that he had reviewed a 3D rendering of how the new equipment would interface with the existing facilities.
The circular storage tanks, which will have a diameter of 180 feet, are currently being constructed in Belgium and will be delivered to the territory in one piece after they have been completed and tested.
Hodge said the engineering report discovered a need for some preparatory engineering to accommodate the tanks: 400 pylons will need to be sunk on St. Croix to compensate for soft soil and on St. Thomas a portion of a hill will need to be blasted away to make space. He said he was awaiting cost estimates for these two projects.
Hodge said he was certain the work would not delay the conversion, however, telling the board that he expected to break ground in December or January and that the conversion should be completed by October of 2014.
Calling it a “lifeline to the community,” Hodge said the project should result in significantly lower bills for ratepayers.
“I know this is going to be a project that the territory is going to be really amazed with,” he said.
Board Chairman Gerald Groner cautioned business owners rushing to take their companies off the grid with solar panels to take into account that electricity prices were slated to drop when the conversion is completed.
“When you see your projections, count on by the end of next year that you’re going to be seeing 37 or 38 cents a kilowatt for electricity. So when they (solar vendors) tell you how much you’re going to save, don’t compare it to the 50 or 51 cents now,” he said.
Groner added that it may still make sense to invest in solar panels, but he said people should “use real numbers” when making their decision.
According to Karl Knight, director of the V.I. Energy Office, “What it does is it pushes back the payback period.” He said that solar panels will still pay for themselves of the course of their life, just not as quickly as before.
In a related matter, the board voted to negotiate the extension of its lease of a mobile generator from General Electric Power and Water to help ensure the reliability of energy production as the conversion progresses.
The mobile generator, known as Unit 25, is located on St. Thomas as has been used to supplement energy production as other units are taken offline for maintenance. Hodge said the extra generator would be integral moving forward as generators would need to be idled for four to six weeks to be converted to burn propane and natural gas.
The lease is paid for by a special charge on ratepayers’ bills approved by the Public Services Commission known as the RFM surcharge. The board also instructed Hodge to request an extension of the surcharge for one year.
The board set the maximum acceptable cost of the lease at $7,828,746.94.
Groner pointed out that the Environmental Protection Agency had been reluctant to allow WAPA to lease the generator in the first place because they feared the lease would be continuously extended and “it would stay forever.”
Hodge acknowledged those concerns but said the permitting WAPA received for the generator was not temporary and was not in jeopardy.
Board member Alicia Barnes, commissioner of the V.I. Department of Planning and Natural Resources, said she fully acknowledged the need for the generator but was not comfortable with the message extending the lease would send.
“It becomes an integrity issue as well, as far as I’m concerned. As far as what is presented when certain permitting requests are made and then what we do moving forward,” she said.
Barnes abstained from the vote. Voting in favor of the motion were board members Groner, Knight, Wayne Biggs, Donald Fracois, Noel Loftus, and Elizabeth Armstrong. Members Cheryl Boynes-Jackson and Juanita Young were absent.
In other business, the board members present voted unanimously to:
-approve a change order to a contract with Elephant Construction Consultant awarding it an additional $23,829 to install four metal, air-conditioned insulated buildings to house the East End and Tutu substations’ switchgears;
-approve a $339,900 project to bury electrical wires along Frenchman’s Bay Road on St. Thomas;
-approve the purchase of a $219,580 trencher with rock wheel attachment for the water distribution department;
-and to approve an increase of no more than $50,000 to Evertec Inc. for document scanning services.
The board also heard a proposal to set up a 457(B) deferred compensation plan that employees could choose to use as a supplementary retirement saving account alongside their Government Employees Retirement System pensions.
The issue was tabled because the board said the motion was poorly worded and it was unclear how much it would cost to set up the plan.