V.I. Water and Power Authority Executive Director Hugo Hodge warned in a special board meeting Monday that all three islands could soon face prolific blackouts and higher electrical rates.
Hodge said his concern stemmed from the sole item on the meeting’s agenda, passing a Feed In Tariff mandating WAPA generate 20 percent, 25 percent and 30 percent of its electricity from renewable sources by 2015, 2020 and 2025 respectively.
As a public entity, WAPA is legally obligated to pass the Feed In Tariff and the board meeting was only to officially file compliance with the tariff. The Feed In Tariff is part of Act 7586, the second of two net-metering related pieces of legislation sponsored by Sen. Craig Barshinger.
Net metering allows consumers to sell electricity they generate, usually from solar panels or other renewable sources, back to WAPA. This electricity is stored as credit and can be redeemed for an equal amount of electricity or for cash.
Barshinger’s first legislation related to net metering was Act 7075, which when passed set a five-megawatt net-metering limit on St. Croix, and a 10-megawatt limit for St. Thomas and St. John. This means five megawatts of electricity on St. Croix and 10 megawatts between St. Thomas and St. John can be sold back to WAPA each year.
Since Act 7075 allowed net-metering customers to sell electricity to WAPA for the same rate they bought it and since WAPA received no stipend for accepting, processing and rerouting electricity from a net-metering customer, continuing in that vein was not sustainable, WAPA said.
WAPA said it was also losing revenue as net-metering customers could generate their own electricity and no longer bought it from the authority.
Barshinger said he understood the pressure Act 7075 put on WAPA and described it as an “early adoptive model.” He explained that it was a temporary measure to promote net-metering and renewable energy in the Virgin Islands.
After net metering was well established in the Virgin Islands, Barshinger proposed Act 7586, which was intended to make net metering commercially viable for WAPA and to generate more net-metering customers.
Net-metering customers were paid the retail price for electricity under Act 7075, typically around 53 cents a kilowatt-hour. Under Act 7586, net-metering customers only receive the avoided cost for the electricity they sell to WAPA. Act 7586 also expands the limits allowed for more net metering.
WAPA’s avoided cost is the money it saves by not having to generate electricity provided to it by net-metering customers. This is typically around 26 cents a kilowatt-hour. WAPA then sells this electricity for retail prices.
Barshinger said the different prices WAPA pays when buying and selling electricity from net-metering customers is defensible because “WAPA provides a real valuable tangible service,” referring to the routing of electricity along its grid.
Hodge said that, while environmentally sound, the renewable energy the Feed In Tariff mandates WAPA uses threatens grid stability. The root of this instability is volatility, he said, where power levels generated from renewable sources are prone to fluctuation, which places undue stress on the electrical grid and can cause blackouts.
Hodge said solar panels, which provide the majority of the territory’s renewable energy – and WAPA’s generators work in tandem to power the grid and provide electricity for homes. If solar production drops, then WAPA’s generators will have to work harder to compensate for the lack of energy, he said. This sudden increase in demand takes its toll on the generators and could cause an islandwide blackout.
Barshinger said he recognized the possibility of blackouts but blamed WAPA’s generators. He claimed modern generators are twice as efficient as the ones WAPA currently uses and would be better able to deal with the strain that comes from a grid using large amounts of volatile renewable energy.
Barshinger estimated it would cost approximately $240 million to upgrade all of WAPA’s generators. This money could be acquired from WAPA’s saved fuel costs from the upgraded generators, he said, adding that, according to WAPA’s 2013 balance sheet, more than $240 million was spent on fuel.
Hodge raised concerns that the Feed In Tariff could raise WAPA rates, saying that WAPA has certain fixed costs, such as wages, maintenance and payments on old generators, which have to be paid independently of its electrical production.
He said WAPA factored these fixed costs into the price of electricity, explaining that if demand for electricity falls because more people turn to net metering as a source of power, then WAPA will have less electricity to disperse its fixed costs into, causing rates to rise.
Barshinger pointed out WAPA’s inefficient oil burning generators created extremely high energy rates and noted that Act 7586 was a step towards getting 100 percent of the territory’s energy from renewable sources.
