WAPA Faces $375 Million Fiscal Crisis, "Operating in Zone of Insolvency" as Financial Woes Deepen
A report from the V.I. Water and Power Authority’s turnaround management firm, Ernst & Young, estimates that WAPA will require approximately $375 million to address its financial crisis, cover operational shortfalls, and resolve outstanding liabilities—unless substantial debt relief measures are implemented.
2025-02-10 12:25:34 - VI News Staff
The money would be required “to fund operational cash burn and deferred maintenance, and resolve legacy liabilities,” the report says, noting $87 million in past due payables among WAPA's financial burdens.
Compounding the issue, WAPA's projections contain “many risks…that may further deteriorate its financial situation and cause further stress on its operations,” the report notes. If fuel rates do not fall but instead remain flat, WAPA's cash requirements between now and 2030 could be as much as $58 million more than projected. Any decrease in the Levelized Energy Adjustment Clause would cause a major reduction in cash flow – a one-cent reduction of the LEAC “would reduce cash inflows by ~$3m annually,” the report says. WAPA also risks its bottom line through attrition. A 10% reduction in its customer base would cost the company about $8 million a year, Ernst & Young estimates. Altogether, all the risks that could be identified and quantified, should they come to pass, would raise the cash needed by WAPA to $498 million – just under half a billion dollars to stabilize itself over the next 5 years.
On January 29, the same day the report was published, Governor Albert Bryan Jr. told the Consortium that he anticipated a grim review. “WAPA is inefficient and we need to fix this, duh,” he predicted. “You'll spend a lot of money to find out what we already know.” While several lawmakers as of press time have indicated that they had not yet seen the published report, correspondence seen by the Consortium indicated that it was transmitted to Senate President Milton Potter at the same time it was delivered to the Office of the Governor and the Public Finance Authority. An analysis of the report was published by credit intelligence agency Octus on January 30, which contained a link to the Ernst & Young report, which the Consortium has now seen. The full 136-page report is available here.