WAPA Board Discusses Refinery Sale

The governing board of the V.I. Water and Power Authority approved expenses and extensions and discussed the consequences of approving or denying the sale of the Hovensa refinery to Atlantic Basin Refining at its monthly meeting Thursday on St. Croix.

Improving water quality was one of the expenses approved. WAPA Executive Director Hugo Hodge said other methods have failed to rid the rust color from the water coming through some of WAPA’s old iron pipes, and asked the board to approve the purchase of equipment to treat water near the source at the Seven Seas production area.

Changing from desalination to reverse osmosis production and old pipes has increased the rust color in water, Hodge said.

The new equipment would add lime and carbon dioxide to increase pH and alkalinity of the water to reduce the potential of corrosion, Hodge said, adding that Seven Seas would finance the $800,000 project and WAPA would begin reimbursing the water distributor in seven years. Hodge said the water lines would eventually be replaced when funding is available.

The project was approved with one abstention by board member Elizabeth Armstrong.

Hodge also asked for funding for an upgrade to the fire protection system to handle liquefied petroleum gas as WAPA converts to alternative energy within the next few months. The first phase will include fire and gas alarm control panels to monitor and activate systems and fire and gas detectors for both districts.

Board members asked about additional phases to complete the system. Hodge didn’t commit but said two or three stages would likely be needed to finish the project.

Armstrong asked what would happen in case of a propane spill, and Karl Knight, director of the V.I. Energy Office, said the system would shut down and the propane would disperse into the atmosphere as gas.

The board approved almost $1 million for a contract with ESI-Energy Inc. and $375,000 for contingencies.

Funding for automatic generation control was approved at $324,250 for a system to adjust the output of multiple generators as there are changes in the load throughout the day. Hodge said the improvement will reduce fuel and protect the power grid.

Two other projects were discussed and the board approved time extensions. A 50-day leeway was granted to Zenon Construction for the Christiansted underground streetlight project. Hodge said some delays were the result of postponing work to accommodate downtown businesses.

The second extension also incurs no additional expense. There was a delay in the Maximo project because the first contractor backed out and set the deadline back. Maximo software will be used by the WAPA maintenance department to track inventory, assets, work orders and job estimates, and the project now will be completed Mar. 31, 2015, according to Hodge.

During his report, Hodge said the new governor’s transition team toured the facilities last week.

Also WAPA administrators testified at the Senate hearing Tuesday night about the Atlantic Basin Refining proposal to purchase Hovensa and how it would affect the utility. Hodge said he has talked to potential suppliers because WAPA’s supply of diesel oil would run out by Jan. 7 if the sale is not approved by the 30th Legislature.

WAPA would have to locate storage for fuel and new oil sources at higher prices, some prohibitive, Hodge said.

According to Knight, there is limited fuel storage on St. Croix since most tanks were destroyed in Hurricane Hugo.

Hodge said, “It would be a challenge to barge it to St. Croix. We’ve been exploring every option – St. Eustatius, Puerto Rico and others.” Eventually, the cost would decline as the territory converts to propane, he added.

Hodge said he would call Board Chairman Gerald Groner on Saturday morning to arrange an emergency meeting if the Senate vetoes the sale.

“It will be a somewhat heightened discussion if something happens Friday,” Hodge said.

At the beginning of the meeting, Groner commented on the customer rate decrease of 39.19 cents per kilowatt hour, down from 48.6 cents for the first six months of 2015. The lower rate is partly due to lower oil prices and the conversion to propane from fuel oil, he said.

“Since I got on this board in 2008, we have been fighting, fighting, fighting to get this number down,” Groner said.

Board members who attended the meeting were Groner, Knight, Armstrong, Licensing and Consumer Affairs Commissioner Wayne Biggs, Juanita Young and Noel Loftus.

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