Excellent Daily News Op-Ed letter about WAPA

WAPA's promises vs. the facts

Published: July 22, 2013

On April 25, all Virgin Islands Senators received a letter from WAPA Governing Board Chairman Gerald Groner, co-signed by Gov. John deJongh Jr., all WAPA board members and WAPA Executive Director Hugo Hodge.

The letter was part of a preemptive effort by WAPA to once and for all put a stop to any effort or notion that would change the status of WAPA as a government-controlled Authority.

In the letter, Groner expressed concern that even talk of a possible privatization of part or all of WAPA was enough to hurt ongoing changes in WAPA that ultimately would result in drastic reductions of ratepayers' WAPA bills.

Furthermore, Groner stated that any privatization of WAPA would increase the cost to ratepayers because unlike WAPA, a private company would have to add a profit on top of the existing expenses. In fact, according to Groner, ratepayers would face a 10-cent hike per KW.

The letter was written and sent to our senators in anticipation of Sen. Craig Barshinger's exploratory hearing on June 11 about legislation or ideas that eventually could lead to privatization of part or all of WAPA.

Did the letter have the intended impact? For those senators who wanted to play it safe and not rock the boat, it probably did.

For those with an analytic mind and some insight into WAPA's modus operandi, it was easy to see that the premises for Groner's rationale was based on a takeover with no changes to WAPA's operation - including personnel, generation equipment and fuels.

Fast forward to June 11.

WAPA's team showed up at the Senate hearing in full force. Practically all spectator seats were occupied by uniformed and paid WAPA personnel.

WAPA testifiers weren't there to listen. They were eager to be heard, and they set out to dominate the hearing from beginning to the end.

Starting with Hugo Hodge, it went on to chairman Groner, then Bond Counsel Patricia Goins and a couple more, all essentially saying the same: Privatization is a bad idea and WAPA is in the process of instigating changes that by April 2014, would result in a 30 percent reduction in ratepayers' WAPA bill. More solar, conversion to LNG and LPG, biomass, wind and a possible connection to Puerto Rico would eventually bring the cost of fuel down to affordable levels.

WAPA's debt - the bond issue - was repeatedly brought up as a major obstacle for any take-over, and again we heard that just having this discussion was giving the bond holders nervous jitters.

WAPA's well-orchestrated appearance seemed to have the wanted effect on the members of Senator Barshinger's committee, and it is safe to say that, at least for now, any talk of privatization of part or all of WAPA is laid to rest.

So, while WAPA's testimony was predictable and somewhat boring, the most eye-opening part of the day came during the testimony of Brian Kuhn. He and his partners in Associated Wind Developers were invited by Sen. Barshinger to highlight the technical challenges in adding unstable sources of power to the grid. Mr. Kuhn and his associates specialize in delivering packages that include all the necessary components that enable small grids like ours to use almost unlimited amounts of solar and wind power.

With billions of dollars in revenue and projects and clients all over the globe, this consortium is no fly-by-night partnership. Kuhn turned the Senate chamber into a classroom and kept his testimony at a level that anybody from fourth grade and up could comprehend.

WAPA has time and again claimed that there is a limit to the amount of unstable power that can be handled by our small island grids. Kuhn told us that this misconception is shared by many grid operators besides WAPA.

If WAPA was serious about incorporating a high percentage of unstable renewable energy, this consortium could help to have that happen in a number of different ways, including keeping WAPA's existing generating equipment. The saving for WAPA and the Virgin Islands' ratepayers would pay for this conversion many times over.

You would think that the WAPA testifiers would stand up and cheer, and you would think that Hugo Hodge himself or one of his engineers would show up the next day for the workshop presentation by Kuhn and associates - but no, none of that happened.

Several senators and other good folks showed up at the workshop to learn more, among them Sen. Kenny Gittens, Sen. Janette Millin Young, Sen. Clifford Graham, Sen. Diane Capehart and Sen. Sammuel Sanes (via phone).

Clearly, Hugo Hodge missed out, because later, during a WAPA board meeting on June 27, he once again expressed concern about the projected amount of renewable add-ons, stating: "It could mean there likely will be an island-wide power outage for 15-20 minutes while WAPA brings another generator online"

It is statements like this that makes you shake your head, or as a friend of mine put it: All this make way too much sense for WAPA!

I tend to agree, but when you go back in time and look at Hugo Hodge's track record, you'll remember his year-long fight for Alpine LLC and Petroleum Coke. The extensive medium campaign aimed at winning over hearts and minds to embrace the world's dirtiest fuel cost WAPA's ratepayers dearly and caused a two-year delay in the discussion that is finally taking place now.

It was only three short years ago, when asked for the ideal solution for power generation in the Virgin Islands, that Hodge said that he would like to see WAPA generate 100 percent of its power from two Petroleum Coke plants, one on St. Croix and one on St. Thomas.

Then came the debacle over the two Tutu Park Mall wind turbines. WAPA's legal counsel was kept busy making sure that the Virgin Islands' first attempt to add wind power to the grid was dead on arrival.

And let us not forget Hodge's ongoing attempt to limit provisions in Act 7075 that allows you to generate power away from your home - thus preventing many more residents from taking advantage of the net-metering program.

We have seen some change in attitude at WAPA, but we still need our senators to keep up the pressure because we are moving way too slow. But like many V.I. residents our lawmakers have been sidetracked in the present debate about WAPA because everybody is looking for short-term relief from their WAPA bill. And rightly so.

Hundreds of millions of dollars are leaving the territory to pay for fuel for WAPA's outdated equipment; money that should have been spent locally to keep our economy going.

However, we must realize what is happening in the world around us and that, as an island, dependency on any imported fuel prevents us from being masters of our own destiny.

Can the Virgin Islands become energy independent?

Yes, we can - but not with the present attitude in WAPA's leadership.

Many of our lawmakers are utterly frustrated with WAPA's attitude and lack of progress, but only one or two have the technical insight necessary to counter the complicated explanations and excuses that WAPA argues.

Sen. Nellie O'Reilly has been up front in criticism of WAPA even before she became senator and has drafted a bill (draft request No.13-0111) that would force WAPA to take steps that would seriously impact the utility's control and monopoly of power generation.

Sen. O'Reilly has ownership of this bill but has decided not to move it forward, thus blocking others from drafting similar bills. She wants to give WAPA another chance to deliver on its promise of a 30 percent reduction in everybody's WAPA bill.

This promise hinges on a purchase agreement between WAPA and a supplier of LPG (liquefied petroleum gas or propane). The agreement has not yet been signed and for every day it is postponed, the 30 percent reduction is pushed further into the future. So come August, and still no contract, we may see Sen. O'Reilly's bill starting its way through the Senate.

So, what's in the draft? Here is a taste of it:

WAPA must have two rates: Peak and Off Peak. All rates are to be determined by PSC. WAPA will be required to purchase, up to the full amount of its base load, all/any peak-time electric power contracts if the cost is less than the PSC-regulated fuel surcharge that WAPA is permitted to pass on to the consumer.

There is much more, of course, but let me once again emphasize that had we had a truly dedicated green team in charge of WAPA, we would now be ahead of the game instead of trying to catch up - and the legislative arm twisting would not be necessary.

A shakeup in management of WAPA can only happen in two ways: by the Senate or/and by the Governor. Both are aware of the relationship between the cost of energy and the ongoing downward spiral of our local economy, but both of them appear to rely on the WAPA Governing Board and its Director.

Elizabeth Armstrong, the latest governor-appointed board member, stands out in that her resort, The Buccaneer Hotel on St. Croix, does not get its power from WAPA. Is this an indicator of any kind? Only time will tell.

Several of the businesses on St. Croix that have not thrown in the towel because of extreme energy prices are looking for ways to wean themselves from WAPA.

Rum maker Diageo of St. Croix has opted for a complete disconnect. Home Depot is producing a large amount of power themselves but has maintained net metering.

No doubt this is a trend that will continue. Even if we get the promised 30 percent reduction in our WAPA bills, adding privately financed wind or solar is still a better deal in the Virgin Islands than anywhere else in the United States.

I can envision entire neighborhoods or gated communities coming together and create their own smart grid. For a bank to finance a venture like that isn't far-fetched. I cannot find a better source of revenue for collateral.

As WAPA's revenue continues to shrink, the many good, well-educated people working for the utility may wonder what the future holds. Many of them are aware that sooner or later something has to give and that WAPA essentially is holding the rest of the territory hostage.

There is no doubt that conversion to a "new" WAPA will impact many of the people presently employed by the utility - at least, that's the general feeling. While that is probably true, it is also true that the issue is being used as an argument in favor of maintaining WAPA's existing structure.

It is a touchy issue, but if you can imagine a WAPA bill at 40 percent less than you pay now, you can also imagine where the rest of it, the 60 percent, will be spent. In fact, it could amount to a huge permanent investment boost to our local economy, which again would boost overall taxable income and create new business opportunities which again would dramatically lower the unemployment rate.

However, we may well have to wait for any such change until our energy crises escalates to the point where the WAPA ratepayers say enough is enough

- Steffen Larsen, St. Croix