Dear Source:
The Virgin Islands Water and Power Authority (WAPA) is a public company; that is to say a corporation owned by the People. Therefore you are one of WAPA’s shareholders if you are a Virgin Islands resident. Yes, you are not only a customer of WAPA, you are an owner of WAPA! In this letter I would like to brief you on where we’ve been, where we are, and where we must go with Energy.
I chaired the Energy Committee in the 28th Legislature when we got the ball rolling with Act 7075. The growth of the renewable energy industry has been remarkable. WAPA was initially reluctant to reimagine itself in the new era of fuel-free energy, but in recent months it has shown itself to be a willing partner with its shareholders.
In the current 30th Legislature, I once again serve as chairman of the Energy Committee. The major energy achievement of this term was the passage of the Feed-In Tariff Act, Act 7586. This complements Act 7075 in charting a path forward to using renewable energy rather than fossil fuel.
It is well known that we are suffering from high rates and low reliability. Businesses are closing and some residents can no longer afford their WAPA current, so they simply do without. This causes our economy to contract, just at a time when we need it to grow.
As a shareholder of WAPA, you exercise your voice through your Governor, who nominates a governing board. The Legislature interviews these nominees and confirms those who pass muster.
What can we do with WAPA? 1) We can invest in it, 2) allow it to invest in itself or 3) sell it. The status quo is not an option.
Investing in WAPA:
WAPA had a chance to modernize in 2009, but passed it by. At a time when we had sufficient bonding capacity, the Legislature offered to let WAPA buy all new generators & controls that would make the same electricity with half the fuel. For reasons that remain murky, WAPA declined.
If we had bought modern equipment in 2010, the LEAC would be half of what it is today. That’s because modern generators burn half the fuel to produce a kilowatt-hour of electricity. We didn’t invest in WAPA when we could have.
Today the Government cannot invest in WAPA because we no longer have access to the required funds.
WAPA Investing in Itself:
By contracting with the VITOL company to convert to propane, WAPA has invested in itself. Propane is presently cheaper than diesel fuel. We hope it remains so. WAPA negotiated a deal to have VITOL pay all the up-front costs of the conversion. There have been delays, but propane is "soon come". Today, WAPA is saying that in January 2015 rate-payers should see relief. WAPA touts a 30% reduction in LEAC.
WAPA has also invested in itself by striking a deal to build two 4+ Megawatt photovoltaic (solar) arrays, one in St. Croix, one in St. Thomas. WAPA negotiated deals to produce fuel-free solar energy for between 17¢ and 19¢ per kilowatt-hour. WAPA’s present "avoided cost" is 26¢, so WAPA will save approximately 7¢ per kilowatt-hour savings to the consumer during daylight hours. This is a small first step, but each time WAPA brings another 5 megawatts of fuel-free electricity onto the grid, there will be another small but welcome price drop.
Selling/Privatizing WAPA:
WAPA is worth about $700 million. A buyer would have to assume WAPA’s current bonded debt of $300+ million, and invest over $300 million in new generators and controls.
Senator O’Reilly has the Legislative authorship rights to WAPA privatization. Is it possible to close our budget gap by selling WAPA? Yes and No. Yes, because it’s financially sound. No, because it’s an election year and we still remember Southern Energy in 2000.
In 2013 I drafted legislation to privatize just the generation portion of WAPA. I remain preempted by Senator O’Reilly’s authorship rights. My bill would sell the right to generate plus all existing generators to a company. The winning bidder would offer the lowest heat rate (=highest efficiency) and have no Cap on renewable energy from VI customer-generators. WAPA’s line, billing, and other departments would remain as they are.
Another alternative is to form an Electrical Cooperative. The Coop would not pay $700 million to own WAPA, but having WAPA owned by a Coop opens the door to investment funding from the National Rural Electric Cooperative Association (NRECA) and the Cooperative Finance Corp (CFC). Electrical Cooperatives are widely done in the USA.
For now, it makes most sense to consider how we can get WAPA to invest in itself, as discussed above.
Before I delve into the specific issues of how we work with WAPA to get it to invest in itself, I will point out that Legislators are always trying to figure out what our voters, rate-payers and shareholders want. (These three groups overlap.)
I have been surprised that the suffering rate-payers of the Virgin Islands have done so little lobbying with senators. Teachers show up in the Legislature wearing blue T-Shirts to protest the school Calendar. Retirees show up to demand reform of the GERS before it collapses. Youngsters show up to demand more funding for Summer Camp.Yet almost no one shows up at Energy Hearings or PSC meetings to demand a course of action that cuts our LEAC in half. Why not? People are truly suffering, and the 53¢ electricity hits everyone in the Territory. There were public protests around 11/11/2011, but that activism has died away. Perhaps people are numb, just waiting for the next unbearable WAPA bill?
If that is the case, I must state categorically, here and now, that we are by no means helpless. We can have 30¢ electricity in two years and 20¢ electricity in five years. But doing so means choosing a plan of action and sticking to it!
As far as activism and lobbying, imagine what would happen if 200 people showed up at public meetings wearing a blue T-shirt bearing a yellow lightening-bolt and the words, "Suffering In Silence, Lower Electric Rates Now". No need to wail or even talk. Your presence and your shirt would say it all. (Artwork for the shirt is available on visenate.org)
Democracy is not a spectator sport! If Virgin Islanders can find a couple hundred activists among our population of 110,000, their lobbying could break the paralysis and put us on the bold path that actually brings our energy price to 20¢. Keep in mind, senators are entrusted to vote according to the will of their constituency. Let your voice be heard so they may act in your best interest.
In the meantime, there are some who have found relief from unrelenting WAPA bills. Those who went with Solar Hot Water Heaters under Act 7075 (June 2009), are saving $50 per month. Those early adopters who invested in Solar Photovoltaic Net Metering (NM) Systems are paying nothing to WAPA for electricity. By investing, their power bill went from $1,000+ per month to zero! This is not a fantasy, this is reality.
Virgin Islands residents or business should consider the benefits of Net Metering or Feed-In Tariff, or a stand-alone solar or wind system. It makes good economic sense, and there’s a spiritual dimension to it as well as you open your arms to accept the abundant, fuel-free electricity that our Creator showers us with.
Does Renewable Energy mean that WAPA is a dinosaur about to go extinct? No, we need WAPA, in a modernized form, to buy and sell power between the many thousands of customers and the thousands of customer-generators (those who both produce and consume electricity.) Right now businesses and customers are leaving the WAPA grid in record numbers, which could lead to WAPA’s collapse in a number of years. However, if WAPA modernizes and takes on the role of an energy broker, it could have a long and bright future.
Here are specific things we must do to lower electric costs and increase reliability:
The Central Government and all autonomous instrumentalities must pay their power bills on time, in full, like everyone else. (The Legislature enacted the Single Payer Utility Fund. The Governor refuses to execute it. This leads to curtailed maintenance at WAPA and equipment damage. While that equipment is being repaired, WAPA runs outdated generators that are scandalously inefficient.) This cycle of abuse must stop.
Improve the management practices within WAPA. They are not state of the art. (But how does the Government coax WAPA to adopt state of the art management practices when the Government owes WAPA over $30 million for electrical bills?)
Some people don’t pay their fair share of WAPA’s generation, by accident or design. Automatic Meter Infrastructure will put everyone on equal, fair footing. The Automated Meter Infrastructure (AMI), also known as "smart meter" is coming, but is late.
AMI will allow Time of Day Metering, as well as Supply & Demand metering. These will support the Feed-In Tariff program.
The Renewable Energy industry is coming to a screeching halt as we hit the 5 MW and 10 MW Caps specified by Act 7075. These must be lifted, and must be done by engineering changes at WAPA. It cannot be done by legislation alone.
WAPA must configure the grid to accommodate 100% renewable energy. This means inertial stabilization, microprocessor controls, and utility-scale storage such as pumped hydroelectric storage.
Industry partners are available to work with us. Some bring many millions in Federal Government Grants. We have to learn how to say "Yes" to such gifts. When we are indecisive, these resources go elsewhere.
Early adopters who set up net metering (NM) and are now using WAPA 24/7 but paying nothing must realize that they do not stand apart. Eventually, large NM systems will have to convert to Feed-In Tariff (FIT) systems.
The Legislature is committed to seeing that every early adopter gets their investment paid back, plus a healthy Return on Investment (ROI).
There is misinformation in circulation regarding energy, renewable energy, energy legislation. My office has cataloged them and responded on visenate.org. If you are interested, please read and spread the truth.
You are not just a customer, you are a shareholder of WAPA. Exercise your right to lower cost, higher reliability by taking the steps outlined in this briefing. We can have 30¢ electricity in two years and 20¢ electricity in five years. It will only happen by choosing a plan of action and sticking to it!
Craig Barshinger, Senator-at-Large
