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HomeNewsLocal newsWAPA Board Approves Oil Contract Extension, LPG Dispute Still Pending

WAPA Board Approves Oil Contract Extension, LPG Dispute Still Pending

WAPA Executive Director Julio Rhymer

*Updated: See Editor’s Note* With a contract dispute against its propane supplier still pending, on Tuesday the V.I. Water and Power Authority’s board approved a six month extension to a contract with Glencore Ltd., with a six month option to renew, for fuel oil.

Nothing has changed about the details of the dispute, which was reported on earlier this month after WAPA’s propane supplier, VITOL, suspended deliveries due, in part, to unpaid bills.

The contract extension would have occurred in any event, because the utility needs fuel oil to start its generators even if they will be burning propane, WAPA spokesman Jean Greaux told the Source. But the utility will be using a lot more oil as a result of the suspension. “We will always need fuel oil,” Greaux said.

While officials have said that the switch back to fuel oil in the meantime would cause no service interruptions, it appeared at the authority’s board meeting on St. Thomas Tuesday that there was no definite date for resolution. The authority’s existing contract with Glencore expires June 30, and while WAPA has put out a bid for a fuel oil supplier, officials said more time is needed to complete the procurement process and negotiate a new fuel agreement.

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“While there is an existing contractual dispute between VITOL and WAPA, and an outstanding invoice for propane fuel delivered to the power plants over the past three months, we remain optimistic that we will reach an agreement on the issues at hand,” WAPA board chairperson Elizabeth Armstrong and Chief Executive Officer Julio Rhymer, Sr. said in joint statement released earlier this month.

In Senate and other hearings held over the past month, WAPA officials have listed several factors they said led to the authority’s cash shortfall, including outstanding hospital utility bills and unpaid streetlight bills, which exceed $26 million, along with more than $3.9 million in “assessments” by the Public Services Commission to pay its consultants to help regulate WAPA.

Some of the financial challenges the authority is experiencing are also directly tied to the lack of a permanent base rate, which has been pending before the V.I. Public Services Commission since 2015. While WAPA has been unable to get its rate structure approved, the PSC has continued to levy the assessments, a cost that is eventually passed on to WAPA and to its customers.

During Tuesday’s meeting, however, WAPA board members approved additional funding to PRMG, its consultants on the ongoing electric system rate case filing. Rhymer told board members that an additional $60,000 is needed to finalize the rate case with a target implementation date of July 1.

WAPA is expected to spend about $255,000 on its overall contract with PRMG for work on the electric system rate case, according to officials.

 

In other news, the board approved:

-an adjustment in the cost of security guard services at WAPA’s facilities to factor in anticipated increases in the minimum wage. The adjustment increases the security contract to $770,737. Funding was also provided to cover the presence of security at a secondary access point to the Randolph Harley Power Plant on St. Thomas.

-the purchase of automated switches and controls for the electrical transmission and distribution systems in both districts.

-an extension of a contract with Risked Revenue Energy Associates for the implementation and maintenance of WAPA’s fuel hedge program, which runs through 2019. WAPA has realized about $5.7 million from the fuel hedge program.

-the purchase of two-way radios for the authority’s personnel, which replace near non-functional handheld, base and mobile radios. The current radios and supporting systems are no longer compatible with a mission critical communication operating system, and cannot interface with radios used by emergency first responders, according to officials.

-a change order totaling $53,256.84 to a contract with Majestic Machine & Engineering, for major repairs of the Unit 11 steam turbine generator on St. Croix. The project completion date was also extended.

-a six month extension and contract increase of $106,400 to Tantalus Systems for the purchase of network controller upgrade kits. The approval also provides additional time to upgrade and optimize WAPA’s automated metering infrastructure network. The system is being upgraded to accommodate the addition of smart potable water meters and new streetlight automated functions.

Editor’s Note: This story has been updated to clarify that WAPA would be extending the oil contract whether or not it was currently using propane as its primary fuel.

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