May 3, 2002 Public Services Commission hearing examiner Rosalie Simmonds Ballentine recommended on Friday that the PSC qualify Caribe Waste Technologies Inc. as a "small production facility for each of the three facilities for which CWT has submitted an application."
The recommendation is a step forward in CWT's continuing efforts to get the go-ahead to build a gasification plant — or more than one — to process the territory's solid waste and then sell the power generated as a byproduct to the Water and Power Authority.
CWT was selected by the Turnbull administration last year to build and operate a plant on St. Croix that would replace the federally condemned Anguilla and Bovoni landfills, where the Virgin Islands' solid waste now ends up. Selling the power to WAPA for a projected $11 million to $12 million annually over a 30-year period was an essential element of the proposal.
Should the commission decide in CWT's favor, it could direct WAPA to buy power from the company — something the utility does not want to do. WAPA's executive director, Joseph R. Thomas Jr., has said the authority can supply the territory's power needs on its own and that CWT's proposed technology has not been commercially proven. The WAPA board adopted this stance in November, prompting CWT to take its case to the PSC.
The commission merely received Ballantine's recommendation on Friday, without acting on it.
WAPA attorney Samuel H. Hall Jr. took exception to the recommendation. In reading Ballantine's report, he said, he realized she had based some findings on material WAPA had not included in its written arguments because it did not find the information to be germane.
In a March 18 hearing, Hall had called CWT's bid for certification "premature" because the company has no facility. Adriane J. Dudley, CWT attorney, said the issue was a "matter of semantics." (See "CWT and WAPA lock horns at PSC meeting".)
In her analysis of how PSC regulations should be read and applied in the case, Ballantine states: "If the commission agrees, as WAPA argues, that the application is premature as the facility must be in existence before it can apply for QF [qualified] status, our analysis ends here. It is undisputed that no facilities exist. Such a reading, however, would be too restrictive and defeat the purpose of the [PSC] statute, which is to encourage alternative energy production."
The report continues, "… there is unrefuted testimony that without pre-certification of small power facilities, it would be almost impossible to obtain investors and financing."
Hall said that testimony is not "unrefuted" by WAPA, and he asked the commission for time to reply to Ballentine's remarks.
Hall elaborated later: "It would not be 'almost impossible' to obtain financing. There are a number of ways to finance investor projects. Because CWT doesn't have the assets to build it themselves, they are only really capable of project financing, where they put together a package and then convince people to lend money based on the strength of the project alone, rather than based on assets such as mortgages or stocks. Or else you get backing from a third party, like the V.I. government. You cannot suggest that it is 'almost impossible' to do these projects any other way."
As Hall sees it, there does have to be "an existing facility" in this case.
"The hearing examiner misses the point of Congress giving the V.I. jurisdiction to decide these issues," he said. "On the mainland, these issues are decided by the Federal Energy Regulating Commission. What Ballentine did was treat us as though we were some state in the U.S. We are not connected to a nationwide grid. The cost of evaluating and integrating CWT is a significant percentage of WAPA's asssets, and the power they propose to supply is a real high percentage of the power need of the V.I.
As an example, he said, "If a Kansas power producer didn't succeed in coming on line, it would be only an infinitesimal fraction of their power, because they are connected to the nationwide grid." And, he added, "The engineering, technical, legal and design aspects for the mainland is infinitesimal compared to what it would cost WAPA. We are islands."
Basically, Hall concluded, "the uniqueness of the V.I. is what Ballentine ignored, even though Congress gave us that power."
Dudley stated that WAPA has had "ample time" to prepare its case against CWT being qualified as a "small production facility" in the territory. "My client is becoming extremely frustrated," she said.
Ballentine concluded that the PSC should dismiss without prejudice WAPA's petition for protection from having to purchase "unreliable" power. She said the issues raised by WAPA are more appropriate for consideration in any subsequent proceedings relative to interconnection or revocation of QF status.
PSC attorney Frederick G. Watts suggested the commission allow Hall the opportunity to present his new material and explain why it had not already been included, and that the commission set a date for a hearing for that purpose. He said June 4 is the end of the period by which the commission must act, or the qualifying of CWT will be deemed approved.
The commission voted to give Hall until May 17 to submit further arguments and gave Dudley five more calendar days beyond that date to respond to Hall's comments.
In Ballentine's findings, she states that "qualified" status should be granted to facilities proposed to be located at three sites, two on St. Croix and one on St. Thomas. One St. Croix site is Estate Bethlehem Middle Works, on the south shore west of the Container Port and Harvey Channel. The other would be either at Estate Negro Bay (Coopers), on the south shore near Henry E. Rohlsen Airport, or at Estate Krauses Lagune, by the Container Port. The St. Thomas site is Estate Bovoni. Up to now, only one facility, a $180 million plant to be located on St. Croix, had been mentioned.
Should the PSC certify CWT as a "small power provider," the administration's contract with the company would next need to be ratified by the Legislature. It would probably go first to the Senate's Planning and Environmental Protection Committee, which is chaired by Sen. Donald "Ducks" Cole, one of two senators appointed as non-voting members of the PSC.
In other business, the PSC briefly discussed the current WAPA rate investigation. The investigation has been put behind schedule because the utility has objected to attorney Ronald Russell serving as the hearing examiner for the case. Russell represents a client who is suing WAPA in an unrelated matter. The issue has been seven months in Judge I've Swan's Territorial Court awaiting action. Meantime, the authority has supplied the PSC with the needed information, but Maynard said the commission has not had time to act on it.
Among those attending the hearing Friday was WAPA's Thomas, who became executive director of the utility a year ago and whose last day on the job will be Monday. As Thomas, who was pressured by the WAPA board to resign this week, was about to leave the hearing room, Maynard asked him to remain for a moment. "I want to tell you, I regret your tenure has been so short," the PSC chair said. "It's been a pleasure working with you."
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