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HomeNewsLocal governmentWAPA Pleads Continued Emergency, Gives CEO $50K Bonus

WAPA Pleads Continued Emergency, Gives CEO $50K Bonus

Kevin Williams, chief policy advisor and head of Incident Command at the Governor’s Office, said his team was making strides but needed more time. (Photo by Barry Leerdam, Legislature of the Virgin Islands)

The Virgin Islands Legislature approved a 90-day extension of a state of emergency at the Water and Power Authority Monday with the hope the embattled utility could solve some of its myriad underlying deficiencies. Senators, however, interjected a monitoring measure that required the governor’s Incident Command team to appear before the Senate every 30 days for an update.

The bill extends Gov. Albert Bryan Jr.’s state of emergency, which allowed money to flow to WAPA without Senate approval, to end Sept. 19 — not the normal 30-day increments.

The additional time was vital to finalize contracts for fuel, fuel shipping, equipment repair, and more, said Kevin Williams, chief policy advisor and head of Incident Command at the Governor’s Office. The state of emergency also allowed the Incident Command, which meets in cases of disaster or other emergency, to apply its manpower, freeing up WAPA staff to meet other needs.

Bryan declared the state of emergency April 22, saying WAPA was dangerously short on funds in part due to U.S. Virgin Islands agencies themselves. Bryan said the territory’s hospitals and the V.I. Waste Management Authority owed the utility approximately $11 million in past-due bills. Bryan planned to bypass normal Senate approval to tap directly into the territory’s $21 million Budget Stabilization Fund — also known as the Rainy Day Fund — to cover WAPA’s immediate obligations. Bryan planned to immediately address a $2.3 million debt owed to Aggreko, the company leasing generators to WAPA crucial for generating power.

A day after the declaration of emergency, the Senate gathered before a planned session to decry the emergency measure, saying it was necessary because of poor planning and transparency on the part of Government House and WAPA. That theme continued Monday as several senators said the utility was providing only a partial part of the actual situation, continued to make agreements with vendors without exhausting comparative options, and lacked a solid plan going forward.

Away from the state of energy emergency issue, WAPA Board Chairman Kyle Flemming revealed outgoing CEO Andrew Smith received a $50,000 bonus this year based on performance criteria outlined in his contract. Smith joined the utility in January 2022 with a message of reform. He announced his resignation this month. His last day is scheduled to be June 30.

Smith declined to testify at the Senate hearing Monday, saying it was inappropriate for him to offer opinions, commentary, or other testimony addressing matters that may affect the future direction of the authority.

Williams said he had not been aware of the bonus but did have measurable results during the first 60 days of the state of emergency — and had plans for changes going forward.

As of Monday, $10,282,677.64 had been drawn from the Budget Stabilization Fund to offset bills owed to WAPA by the Waste Management Authority, which owed $6,111,923.64, Schneider Regional Medical Center, which owed $2,591,702.00, and the Juan F. Luis Hospital, which owed $1,579,052.00, he said.

WAPA and the Incident Command sent $2.5 million to Aggreko to reduce the risk of blackouts on St. Croix, Williams said. The utility is also days away from closing on an infrastructure acquisition that will reduce interaction with fuel and equipment supplier Vitol.

The WAPA and Incident Command team also negotiated a return to work with Wärtsila, whose propane-powered generators are vital to stabilizing the islands’ electrical grid, he said. Wärtsila work had stopped in December, Williams said.

“The work is critical as the four generators and associated battery packs will bring online new generation for increased reliability and significantly improved fuel efficiency. Additionally, this will give WAPA the added capacity to begin the process of remediating deferred maintenance,” Williams said. “This project will bring online 36 megawatts of power with 9 megawatts of battery capacity. This will reduce WAPA’s expenses by $2.5 million monthly. The stabilization of WAPA runs through the final completion of the Wärtsila project.”

But many variables remain, he said. Because the authority sells electricity at a rate lower than it costs to produce and countless pipelines of other issues, the utility expects to lose $5 million each month.

“WAPA is out of surgery but remains in intensive care and requires round-the-clock attention,” Williams said. “We started off meeting not every day and we quickly realized this was the type of thing that required a daily effort.”

Getting the cost of creating power down is vital, he said. Currently, it costs $0.55 to create a kilowatt hour but WAPA sells it for $0.41.

“The Incident Command continues to facilitate communication between WAPA, U.S. Department of Energy, V.I. Electron, the National Renewable Energy Labs, and Sargent & Lundy to push for expected and measurable progress in getting the Petronella solar site connected. The interconnection study being performed by Sargent & Lundy is expected to be completed by July 31, 2024, for the Petronella site. Studies for the remaining sites on St. Croix will follow shortly thereafter,” Williams said. “We remain hopeful that within the next 90 days, the first solar site at Estate Petronella on St. Croix will be able to be added to the generation mix on St. Croix. The second site at  Estate Hogensberg should follow shortly. This represents 26 megawatts of purchasable power combined.”

WAPA needs to stabilize power to St. John, collect more of what the authority is owed and pay its vendors, and resolve dramatically delinquent maintenance needs.

“WAPA’s entire fleet of gas turbines is significantly overdue for major maintenance. Major maintenance is typically performed on a gas turbine every two years, but WAPA’s gas turbines have not had major maintenance performed in over 10 years,” Williams said. “Currently there is $34 million in deferred maintenance cost covering the generator units on St Thomas and St. Croix.”

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