Gov. Charles Turnbull is assembling a task force to study Southern Energy Inc.’s offer to purchase the V.I. Water and Power Authority.
In a statement Thursday, Turnbull said he decided to form the task force after receiving a letter from WAPA board Chairman Arthur Downing that said Southern Energy’s proposal "had value." The task force will analyze the legal, legislative and financial aspects of the sale, Turnbull said.
While neither government nor Southern officials have confirmed the amount of the company’s offer to purchase 80 percent of the utility, news reports have placed it at $80 million to more than $100 million.
The WAPA task force will include Rudolph Krigger Sr., Turnbull’s assistant for fiscal policy and economic affairs; individuals from the consulting firm of Price Waterhouse; the administration’s outside legal counsel, Winston and Strawn; and the commissioners of Licensing and Consumer Affairs and Planning and Natural Resources, both of whom are WAPA board members.
"I have instructed the members of the WAPA task force and negotiating team that the government has no interest in selling or restructuring WAPA simply to raise cash or finance current debt," Turnbull said in a release. "Rather, the government only has an interest in considering such a transaction if the restructuring can provide: better and more reliable service at lower rates for the taxpayers of the Virgin Islands; a greater return on the government’s current investment in WAPA’s assets; and adequate protections for existing WAPA employees."
Southern Energy, the nation’s largest supplier of electricity, is proposing that WAPA be reorganized into two separate companies, Turnbull said. The government would retain 20 percent of the utility, particularly the electrical system’s transmission and distribution equipment. Keeping those systems within government ownership would make them eligible for Federal Emergency Management Agency funding in the event of a natural disaster.
A new company, in which both Southern and the government would hold ownership interest, would operate 80 percent of the utility’s electricity plants, water purification plants and water distribution system. Electricity would be provided through the government-owned distribution system, according to a lease agreement.
Turnbull said Southern Energy would operate the new company with government participation. It would be regulated by a "strengthened" Virgin Islands Public Services Commission, he said.
"Under the proposal now under review, the public and social interest would be secured, not through government or bureaucratic ownership, but instead through government regulation of private activity pursuant to a reinvigorated PSC," Turnbull said.
Former Gov. Roy Schneider twice floated attempts to sell WAPA for approximately $30 million to $40 million. Those efforts, however, were more exercises to increase revenues to balance his budgets than improve the utility’s delivery of services. Turnbull said the proceeds of any sale would be reinvested in other "critical areas of the territory’s economic and social infrastructure."
"Thus, the proposed transaction should not be viewed as a mere sale of WAPA or its assets," Turnbull said, "but rather as a redeployment of capital for vital public purposes."