Senators question WAPA leadership
Senators in the Committee of the Whole questioned V.I. Water and Power Authority officials for hours Monday, and expressed dismay at the ongoing fiscal crisis and lack of accountability for poor decisions that have cost the Authority millions of dollars and may even constitute criminal conduct.
2022-05-17 12:31:10 - VI News Staff
Senate President Donna Frett-Gregory explained that the Legislature had intended to hold the hearing following the V.I. Inspector General’s November audit report on WAPA’s disastrous contract with fuel supplier Vitol. But senators agreed to delay the hearing at the request of WAPA Board Chairman and Energy Office Director Kyle Fleming, so new CEO Andrew Smith could have more time to become familiar with operations.
Sen. Alma Francis Heyliger read excerpts from the report, and said that based on the Inspector General’s conclusions, “a whole lot went wrong. Not a little bit, millions of dollars went wrong.”
The report found that WAPA’s board and management chose to cut corners in an attempt to speed the process along, in an effort to reduce energy prices through a switch from fuel oil to cheaper liquid propane gas.
WAPA hoped to complete the fuel conversion project in two years, by Feb. 28, 2015, at a cost of around $87 million. WAPA officials said the switch to LPG was supposed to provide savings of 30% or $90 million annually.
The project’s total cost eventually exceeded $200 million, and only 80% of the territory’s generators currently run on propane. Smith said Monday that officials have not determined the project’s actual cost savings, but he emphasized that fuel oil is 78% more expensive than propane to create the same amount of energy.
Sen. Milton Potter asked if the project was ultimately worth the expense.
“I can tell you today, propane is significantly cheaper than 2 oil. Was it the right decision to use Vitol? It’s where we are today,” Smith said.
Fleming, who was elected board chairman in July, said he cannot speak to the decisions made by previous officials, but the board has strengthened protocols to ensure contracts are being properly vetted for legal sufficiency.
“According to what you’re saying, this board doesn’t know what happened and they’re not being held accountable. I get it,” Francis Heyliger said.
Smith said the Inspector General’s recommendations have been implemented, and there are more reforms coming.
The Public Services Commission must ultimately review and approve or deny requests for rate increases by WAPA, and Smith said that the current plan is to avoid the need for such requests.
“We do not intend to ask for a rate increase,” Smith said.
Smith has been on the job for four months now, and told senators he has a plan to rehabilitate WAPA’s finances, but declined to provide specifics, citing ongoing negotiations with suppliers.
“We have inefficient generation on both islands,” Smith said, with estimated electric line loss “north of 10%.”
Projected fuel savings figures “would be highly valuable information to know if you’re trying to sell or lease us more efficient generation,” Smith said.
Sen. Novelle Francis Jr. said WAPA continues to suffer from an “obvious lack of transparency,” a sentiment echoed by other senators throughout the hearing.