V.I. Water and Power Authority electric rates – already among the highest in the world – are not going up, the utility’s CEO said Thursday.
“We do not have any intention of increasing the rates,” said Andy Smith, responding to a recent news report concerning the 39 percent difference between what it costs WAPA to generate electricity – 57 cents per kilowatt-hour – and what it collects: 41 cents per kWh.
“It’s simply a fact that the cost is 57 cents and the rate is 41 cents, and the math is a difference of 39 percent,” said Smith.
As a resident of St. Thomas and a WAPA customer himself, Smith said he is acutely aware of the impact of inflation on the U.S. Virgin Islands community, with groceries up 11 percent over a year ago, gas up 44 percent, and diesel fuel a whopping 75 percent.
While WAPA is feeling the pinch as well – it currently uses 20 percent diesel and 80 percent propane to power its generators – Smith said the utility will not be passing along those costs to the community but instead is looking to create efficiencies and ease its reliance on global commodities.
“We have absorbed those higher costs to protect the community,” said Smith, who said that in the last 12 weeks, 70 percent of the utility’s cash went to pay for fuel. “There is no intention of passing through any increase in the cost that we’re suffering from now. That’s why efficiency is a priority.”
Smith was speaking on the Press Box, the weekly Government House program that features USVI officials addressing viewer questions, along with Kyle Fleming, head of the WAPA board and director of the V.I. Energy Office.
About six months into the job now, Smith has said previously that his focus is on identifying the areas where the financially embattled utility has lost its focus.
“We absolutely need solar and wind resources in the territory,” said Smith, who outlined the utility’s plans to develop solar generation on St. Croix through a power purchase agreement, whereby a developer would build and own the plant, and WAPA would buy the electricity at a set rate. That kind of partnership negates the reliance on federal funds, which can take years to secure, and gets the project off the ground more quickly to realize cost savings immediately.
“We’re going to do as much of that as we can,” said Smith.
St. Croix is the ideal location for solar farms, given its size and flatter topography compared to St. Thomas and St. John, said Smith. Because WAPA rates are the same for all customers territorywide, creating cost savings through cheaper energy generation on the big island will benefit everybody, not just Crucians, he explained.
Other efficiencies include federally funded projects that are seeing WAPA move to solar generators, upgrade its substations, and underground utilities, and replace wooden poles with composite ones to make the system more resilient to storms, said Smith. The latter two projects are about 65 percent complete across the territory, he said.
Then there are the smaller efficiencies, such as streamlining the customer service experience.
“My perspective is that we spend a lot of time doing things that add very little value, if any,” said Smith, such as requiring customers to fill out paper forms instead of providing that ability online. Doing so would free up employees to answer phones and help people with problems that need human engagement instead of filing mounds of paper, he said. “Streamlining the process is first and foremost.”
Other goals include ending the reliance on estimated billing – currently, around 7 percent, down from 10-plus percent, said Smith. About 70 percent of the territory’s meters are read through an automated system, but it should be closer to 90 to 98 percent, he said. “We will address that,” he said. In the meantime, Smith said he has focused on solutions as simple as getting vehicles that were in disrepair back on the road so that meter readers can do their job, which in turn lessens the need for estimated billing.
Seemingly small steps such as these can add up to cost savings, and boost employee morale, said Smith, who outlined his priorities to show host Laurissa Ellis of the Office of Disaster Recovery. Top of the list is taking care of WAPA’s workforce, who “do so much with so little,” he said. That includes everything from making sure they have new uniforms and the proper tools for the job to safe conditions and vehicles that work.
Second is fuel efficiency, largely through more use of solar and cutting the reliance on carbon fuels, and third is generating hard data so that decision-making is fact-based, said Smith. “We have to measure and manage what we do,” he said, and “make decisions on what we know to be true.”
That’s where Ernst & Young comes in. While WAPA officials have taken heat in the Senate for the consultant firm’s $150,000 monthly price tag, Smith said Thursday they are on a month-to-month contract and will be retained only as long as needed. “They won’t be here forever,” he said, but they have strong institutional knowledge, have helped secure much-needed federal funding, and also are training the next generation of employees so that in the future, they won’t be needed at all.
As for the WAPA board, Fleming said Smith’s efforts align with its ideals of increased efficiency and transparency to tackle the “confidence erosion” of the public.
“I’m very confident in the team that we’ve been able to put in place, and that Andy has been able to put in place, to continue to be creative in that way to ensure that we’re not continuing to increase the energy burden to the community,” said Fleming. “It’s gone too far for too long. I think there is no question of that. I think this is more than a challenge that we are willing to take on, to continue to shield the community,” he said.
“We have to recognize that the Virgin Islands is not going to continue to grow if we continue to add these cost burdens. … We are never going to see the evolution of our community if we continue to just levy more and more cost burdens from the energy sector,” said Fleming.