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Bryan Says USVI Suffering ‘Energy Crisis’ After WAPA Defaults on Propane Payments

St. Thomas 𑁋 At an emergency press conference on Saturday, Governor Albert Bryan Jr. said to reporters that the U.S. Virgin Islands is facing an energy crisis. The Virgin Islands Water and Power Authority (WAPA) on Tuesday petitioned the Public Service Commission (PSC) to reconsider its decision on December 12th, in which the commission lowered the fuel surcharge, known commonly as the LEAC.

Propane Supplier Halts Deliveries to WAPA Until Authority Resolves Debt

By Friday the same week, the public officials learned that Vitol, — the Dutch company supplying the utility company with propane to lower electricity rates in the territory — declared WAPA in default and was set to suspend propane deliveries the following day.

This marks the first time Governor Bryan has acknowledged that WAPA is, in fact, facing an energy crisis publicly. The PSC decided not to take action on the base rate petition and allowed the lease generation surcharge to expire at the end of this year. WAPA’s petition for reconsidering the decision was submitted to the PSC following the December 12th hearing.

The Vitol Group — or simply Vitol — is a Dutch energy and commodity trading company that was founded in 1966. Vitol saw revenue climb to $152 billion in 2016 and is the largest independent energy trader in the world.

Bryan and Senate President Novelle Francis Jr. have agreed to sit down with Vitol to discuss options and formulate a plan to get propane service restarted at power plants

Previous Week’s Timeline

  • Monday, December 16th – WAPA Communications announces December 20th meeting scheduled for WAPA’s Governing Board.
  • Tuesday, December 17th – WAPA petitions the Public Service Commission for reconsideration to lower fuel surcharge after December 12th adjustment.
  • Thursday, December 19th – Bryan/Roach Administration issues an additional $16.1 Million in income tax refunds, bringing the total to $63.8 million since Governor Albert Bryan Jr. and Lieutenant Governor Tregenza A. Roach took office in January.
  • Friday, December 20th (4:38 p.m.) – Governor Bryan Calls 33rd Legislature into Emergency Meeting to Discuss V.I. Water and Power Authority.
  • Friday, December 20th (8:55 p.m.) – Vitol declares WAPA in default and will suspend propane deliveries on each island the following day.
  • Saturday, December 21st – Propane delivers cease in the territory, members of the 33rd Legislature and Government House both hold emergency session via teleconference to discuss WAPA’s status with Vitol.
  • Saturday, December 21st – Governor Bryan tells reporters via teleconference his administration and senators have tentatively agreed to assist WAPA and prevent the territory’s energy crisis from deepening. The figure proposed by officials is $3 million to resume propane deliveries.
  • Sunday, December 22nd – Senate President Novelle Francis Jr. shares updates about Saturday’s special session and the Legislatures stance on stepping in to assist WAPA.

“It is counterproductive to return to using traditional fuel at this time, which would result in unreliable power generation and additional costs to the utility, which will then be passed on to the consumer as higher LEAC charges,” Francis said in a statement. “It is unconscionable to expect Virgin Islanders to absorb what could be up to a 40 percent increase in LEAC.”

In 2016, the bond rating agency Moody’s cited the PSC stance on base rate increases when it downgraded WAPA’s fiscal outlook, making it more difficult for the utility company to secure necessary lines of credit. Moody’s downgraded WAPA to ‘junk bond’ status following its report.

Government House Not Considering State of Emergency as Energy Crisis Deepens

As uncertainty grows, propane reserves in the territory continue to decline. Senators also noted that there are many “issues around accountability” and concerns surrounding WAPA’s management and operations Bryan said. All 15 senators and representatives from WAPA attended the meeting, which was video conferenced at the Bureau of Information Technology offices in both districts to avoid costly last-minute travel accommodations.

During the weekend press conference held via teleconference, Bryan said that he hopes that the PSC is not using its regulatory powers to punish WAPA at the expense of consumers. “We cannot have a Public Service Commission that is intent on ruining WAPA or intent on settling past differences of opinion on the way forward,” Bryan said.

After Hurricane Dorian impacted the territory in late August, the storm left the St. Thomas-St. John district with a wave of rolling blackouts, with the utility company’s power plants experiencing a spike in outage before the hurricane made landfall. Congresswoman Stacey Plaskett wrote Bryan and Francis urging both heads to consider declaring a state of emergency at WAPA. Speaking to reporters, Bryan said, “there is no consideration to declare a state of emergency,” adding that “it wouldn’t give us any tools and wouldn’t have any impact on the situation.”

Bryan argued that if a sitting governor declared a state of emergency in response to WAPA’s energy crisis, it would have zero effect on the territory’s access to new resources and would mainly serve as a tool to generate awareness in the press. “We have had several investors come to the table. And every single time someone opens their mouth to make a disparaging comment about WAPA, we start over again,” Bryan said in September.

“As I stated in my letter to Governor Bryan and Senate President Francis on Sept. 19, 2019, I stand ready as the Congressional representative of the Virgin Islands to work at the federal level with the governor and the Legislature of the Virgin Islands on solving the crisis in the Water and Power Authority,” Plaskett said in a statement to the Source. “I appreciate that the governor has stated that WAPA’s position at this time is indeed a crisis.”

In a November press conference, Plaskett said that Bryan was dramatically contradicting his own transition report, completed before he took office. “We must move forward with boards that are unbiased when looking at how we treat the utility,” Bryan said.

Next Steps

Byran briefly detailed propane shortages that are beginning to develop in each district, with St. Croix already experiencing units that don’t have enough fuel to meet demand if non-propane units lose generating capacity. WAPA’s declining propane supply and its new default status with propane supplier Vitol, indicates that “we are in a true crisis in our energy system,” Bryan said to reporters.

“The default notice came on the heels of yet another denial by the Public Services Commission (PSC) for a base rate increase, which would allow WAPA to refinance its debt. On Dec. 12, the PSC voted unanimously to decrease the electric Levelized Energy Adjustment Clause (LEAC) rates to 16.39 cents per kilowatt-hour, and the water LEAC to $5.03 per thousand gallons, effective Jan. 1 – without a corresponding increase in the base rate.” Government House said in a statement. “Following the PSC’s decision, VITOL declared the Authority in default of its payment obligations. The Authority has been petitioning the PSC since April for a base rate increase.”

Bryan acknowledged that lawmakers were clear that they needed exact figures before agreeing to subsidize the utility’s operations, senators reportedly pressed for a long-term solution. “WAPA is committed to providing that information to the senators so they can make a more educated decision in how we create a longterm plan moving forward,” Bryan added. Government House and lawmakers are scheduled to meet again on Monday.

Officials are considering offering subsidies to WAPA to avoid directly covering the utility’s monthly bills in the future. “Now, we will need to use all the resources in our toolbox and work creatively to solve problems that have been decades in the making,” Plaskett added. “I reiterate that I believe declaring WAPA in a state of emergency would be important.”

WAPA has been hit with a number of high profile shortcomings this year, including taking heat from officials and ratepayers after $2.17 million was stolen in an email scam, which was followed by a data breach that exposed customers financial credentials to hackers — the breach led to a number of customers reporting false payments in their accounts.

Governor Bryan and lawmakers have agreed to consider a special session this week to weigh options, including appropriating $3 million for WAPA to resolve it’s cash flow issues and maintain uninterrupted operations at both of its power plants.