Water and Power Authority officials shuddered Thursday at potential existential threats to the long-troubled utility posed by its own regulators this week.
WAPA CEO Karl Knight said an idea floated at a recent Public Service Commission meeting to reduce the rate Virgin Islanders pay per kilowatt hour may seem attractive but would work to undermine the authority’s tentative footing as it works toward the yet-distant goal of financial solvency.
Also troubling was the Legislature’s decision Wednesday to end the state of emergency that had allowed Government House to quickly inject cash for fuel when needed for the last roughly eight months, Knight said.
“I think it was ill-advised. We are in a precarious situation. The ability to call on the executive branch to support us with our cash flow…that’s a helpful lifeline. Whether we use it or don’t use it, having the ability to be backstopped in that fashion allows us to make better decisions because a lot of the decisions we make, when it comes to cash flow, are just in time. We are looking at cash collections this week to see if we can pay the bills at the end of the week. If we were to come up short in any week, the ability to say, ‘hey, we’re a little short, can you assist,’ that’s helpful,” he said at a meeting of the board of directors Thursday.
Knight acknowledged it was the Senate’s purview to allot spending, including in emergency situations. The concern was the speed at which the legislative body could act in an emergency. After Wednesday’s session, where legislators chose to end the state of emergency, the Senate does not meet again until the middle of January. A lot could go wrong in that three and a half weeks, Knight warned.
“If anything happens between today and Jan. 13, I don’t have a legislative body that can move an appropriation to release funds that are necessary to take care of whatever we have to do. If I have a catastrophic failure at Francois Substation, or God forbid some other emergent situation — it’s just, the process is not nimble enough without me having the ability to work through our fiscal crisis with the executive branch. I know that we can’t keep a state of emergency going indefinitely and that certainly is not my suggestion. I have always represented by March of next year we’ll be in a better position and can wean ourselves off of those subsidies or we’re not going to make it, period. We’re moving in the right direction. Our initiatives are coming along,” Knight said.
The board narrowly approved plans to purchase a new substation transformer that would allow for the East End Substation in St. Thomas to be taken offline for vital repairs, and to contract for new fuel suppliers and additional auditing.
Knight said while these were positive developments and something to be built on, they were not the end of WAPA’s troubles.
“Things are certainly going in the right way,” he said. “A one-year state of emergency I think would have made sense. Ending at this point in time — I understand the political pressure that the Legislature is facing but I don’t think it squares with the reality.”
In emphasizing progress at the long-troubled utility, Knight feared he and his team may have given the impression it was not operating in crisis mode, which it very much was, he said.
“We know the conversations we have when we start on a Monday not knowing how we’re going to put fuel in the tank on Friday. This week was one of those weeks,” he said.
Knight said WAPA had about two days of fuel left when the government of the Virgin Islands helped buy diesel.
“We’re cutting it very close to the margins and I think we insulate some of the decision-makers from how challenged we are in some instances and perhaps that’s to our disadvantage. Maybe I need to ring the alarm bell, sound the alarm bells a little louder so everyone understands we’re not out of the water yet. Even though we’re pushing out that good news because we want to show people there is light at the end of the tunnel, there is progress being made, but it doesn’t necessarily mean we have fixed everything and we’re back to normal operations circa 1980 or 1990. We’re not there yet.”
Board member Maurice Muia asked what would happen if WAPA could not pay its debts and payroll.
CFO Lorraine Kelly and attorney Dionne Sinclair outlined a disastrous scenario where creditors potentially took control of the authority, employees stopped showing up, and the territory was plunged into darkness.
“I don’t think the decision made yesterday by the legislature was a good decision,” Muia said.
The board met minus one member as Lionel Selwood, Jr. quit for unexplained reasons, board Chairperson Hubert Turnbull said. Selwood, a native of St. Thomas and Charlotte Amalie High School graduate is president of California’s Romeo Power Technology. Requests for comment from Selwood were not immediately answered.
