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HomeNewsLocal newsSenate Panel OKs Bill Raising WAPA Debt Ceiling

Senate Panel OKs Bill Raising WAPA Debt Ceiling

WAPA CEO Lawrence Kupfer urges the Senate Finance Committee to approve raising the Authority's debt ceiling.
WAPA CEO Lawrence Kupfer urges the Senate Finance Committee to approve raising the Authority’s debt ceiling.

Lawmakers voted Tuesday to increase the maximum amount that the Virgin Islands Water and Power Authority can borrow and classify as debt – from $500 million to $750 million.

Bill No. 32-0312, heard before the Senate Finance Committee on Tuesday, would amend current statute that authorizes WAPA to issue and sell bonds with an aggregate principal amount of up to $500 million. In a letter proposing the bill to Senate President Myron Jackson (D-STT), Gov. Kenneth Mapp said the bill aims to give the authority the “critical flexibility” it needs to fund capital programs and operations of its power and water plants.

The bill, sponsored by Jackson at Mapp’s request, would also exclude from the maximum debt obligation any loans from federal agencies, as well as capital and operational leases agreed to by the utility. WAPA officials clarified that raising the debt ceiling would not increase the utility’s capacity to borrow above its existing contractual obligations.

When asked by Sen. Nellie O’Reilly how the increased debt limit – and the potential projects it would fund – would impact ratepayers, WAPA Chief Executive Officer Lawrence Kupfer said it depends on what those projects are. If they promote power efficiency, which is the authority’s overall goal, Kupfer said, it would drag the rates down.

Failure to raise the debt ceiling, however, may cost ratepayers. According to Kupfer, the current rates already take into account some projected savings from the lease of two higher-efficiency generating units from Aggreko LLC, which is projected to reduce the authority’s costs by $18 million a year. The project is scheduled to go online in January next year, but the savings have begun taking effect in July.

The Aggreko contract requires WAPA to get $1.7 million in irrevocable bank guarantees, an amount that would be counted toward the debt ceiling.

“Come January 1, if we can’t resolve this debt limit, Aggreko would not turn over the unit to WAPA, which would mean increasing the rates,” said Kupfer.

Three St. Thomas generating units under a contract with Wartsila – expected to save the authority $25 million a year – are slated to go online in December, but consumers would see saving beginning in October if they raise the debt ceiling.

WAPA’s debt ceiling has grown drastically since 1966, when it stood at a mere $10 million. The last increase occurred in 2008, when it rose from $350 million to $500 million. Kupfer lists the authority’s debt at roughly $320 million, way below the existing debt ceiling, but recent accounting changes and the post-hurricane recovery efforts would tip the debt over the $500-million limit, he said.

According to Kupfer, the 2017 hurricanes left the authority devoid of revenue and with no choice but to seek Community Disaster Loans through the Federal Emergency Management Agency. The federal law authorizing the roughly $91 million in disaster loans preempted the authority’s debt limit, Kupfer said, but they need to count the amount as debt anyway.

“We must be clear that the Community Disaster Loans must nonetheless be included as debt in connection with the issuance of any non-Community Disaster Loan debt under section 106 of [the Revised Organic] Act,” said Kupfer.

This puts the current debt at roughly $411 million, but another change involving accounting and regulation rules increases that amount by $160 million. The authority’s propane conversion contract with VITOL Corp., which was once listed as an operating lease and therefore exempt from classification as long-term debt, is now classified as capital lease by BDO USA, the authority’s auditing firm.

“Although the VITOL agreement explicitly recites the parties’ intention that the lease agreement not be treated as debt, the heightened sensitivity to clarifying what constitutes a capital lease versus an operating lease required additional focus,” Kupfer explained.

WAPA is in fact poised to pay VITOL a total of $310 million for the propane conversion project in the next 10 years after 12 percent in interest factored in each year. Pamela Goins, VIWAPA’s bond counsel, said the auditors would consider only the principal portion of the agreed upon amount – the initial $160 million – as capital lease.

Voting to advance the bill were Sens. Marvin Blyden (D-STT), Neville James (D-STX), Tregenza Roach (I-STT), Kurt Vialet (D-STX) and At-Large Sen. Brian Smith. O’Reilly abstained while Sen. Dwayne Degraff (D-STT) was absent.

Lawmakers also voted to hold in committee Bill No. 32-0263, which would authorize some $10 million from the Limetree operating agreement toward the construction of a new hotel property in Yacht Haven Grande on St. Thomas. According to Vialet, the “loosely worded” bill is waiting for an amendment from Jackson and Blyden, which is expected to tighten the bill’s definitions of the loan’s scope and repayment.

Voting to hold the bill were James, O’Reilly, Roach and Vialet. Blyden and Smith abstained while DeGraff was absent.

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  1. Is there any government agency or business related that is not millions to hundreds of millions in debt in the U.S. Virgin Islands. I seem only to keep reading about these entities trying to raise the limits of borrowing more money , such as wappa, threatening to raise rates otherwise. They can’t even pay to get rid of garbage or retirees. i live on St. John and can’t see any change, except new power poles paid for by the Feds. This is nothing new. This was the same situation as before the hurricanes. They want tourist to pay for everything,employ everyone,pick up your garbage, fix your roads.its embarrassing and disgusting, except for the three generations of pigs that have grown up at the dumpster on centerline road.pay the people owed money to pick up trash, maybe they should just stop altogether and they may finally get paid. At the very least fill the potholes more than once a year, do your job don’t just drive around all day beholdin to no one. If we are not getting any help in these matters, which we aren’t, it’s time to act. Everyone here is afraid to do or say anything for fear of retribution, myself included, if that’s there plan it’s working. I only want things that should already be done, nothing extravagant. This is absurd to me, St. John doesn’t even get a senate vote on it, powerless?

  2. This is why you should really pay attention and motivate others to take a hard look at the majority of people we elect since after they’re elected, they tend to go on a spend-a-thon for themselves. Remember not so long ago after MAPP was elected, he had a lot of super nice vehicles and chauffeurs and chefs preparing whatever he wanted with unlimited travel between islands and hotels and the such. Now he’s gone even further in his audaciousness by paying his elderly mother’s care from political gains within his office instead of out of his paycheck. Let’s stop talking about things and uniting to end this stupidity. WAPA should be on firmer ground since it’s not been privatized out of the hands of the islanders, yet look at the condition and the fees we pay. We should not hold onto such things since it’s only hurting us to have people who are not incentivized to run lean and hard. We need to reevaluate how to compete since other islands are dominating us and “America’s Jewel” isn’t looking so great with the lack of larger firms coming into the territory bringing proper wages and reducing crimes. This leads our unemployed to seek their food from ill-gotten gains or to keep allowing the constant abuse of systems for someone else to pay and to clean up the mess later. UNITE, TALK AND TAKE A STAND WITH YOUR NEIGHBORS and start affecting change for the community which you care about. Stop allowing it and ask for help to organize with your fellow islanders. Tired of being treated poorly by government workers and when you complain there’s no one doing anything about it? That’s lack of duty, lack of care, and lack of inspiration. That would normally get anyone else fired immediately, however, in the VI, it’s simply accepted as “the way we do things”… Suck your teeth in the unemployment line is what we deserve to tell those who would steal from the people they’re here to serve. This isn’t just a problem at the top, this is a cultural issue of the USVI and the people deserve better.

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