Editor's note: The following report was presented by the executive director of the Water and Power Authority on May 2, 2002, in testimony before the Senate Government Operations Committee two days after he and the WAPA board agreed to an "amicable separation" at the end of his first year as chief executive of the utility.
The Virgin Islands Water and Power Authority is pleased to have an opportunity to comment on Bill no. 24-0196, the Infrastructure Maintenance Act of 2001, and to provide an update on the progress of the authority. Also, given your oversight responsibility for the authority, we would also like to bring clarity to some authority-related employee and other issues which have attracted a great deal of attention over the past few weeks.
Concerning Bill no. 24-0196: The authority, as you know, seeks a business approach to street/area lighting, which will insure the success of the service. An adequate and reliable source of funding is a critical part of this business approach. The proposed Infrastructure Maintenance Act of 2001 suggests a source of funding for the street/area lighting business which is different from (and, we believe, better than) the source of funding currently in place.
As you know, street/area light funds were appropriated by the Senate and approved by the governor on Dec. 29, 2001, but no dollars have reached the authority. The proposed act, however, seeks to earmark a portion of the property taxes on each of the islands of the Virgin Islands to support water system expansion, road repair and street lighting services. It intends to place these monies in specific "water," "road"and "street light" funds, which funds are "lock-box" type funds that can be used only be for the stated purpose.
While the authority still prefers the simple and dependable rate surcharge method of funding and would have to confirm that the amounts and timing of payments are sufficient to operate the street/area light business, the proposed act has merit. It also appears to be superior in funding structure and reliability to the approach which is currently in place. Once funded, the authority will be anxious to launch its street/area lighting business to begin in its efforts to enhance the beauty and safety of the Virgin Islands.
With respect to the progress of the authority, let me begin by saying that the Water and Power Authority of the Virgin Islands is in very good shape and improving. Our financial and operating condition is better than it has been in a long time, perhaps better than ever. The authority's progress over the past 12 months has been exceptional as relates to its finances and operations. While we have made some strides from an employee standpoint, some challenges remain to address some long-entrenched employee matters.
The authority's financial situation can be summarized as follows:
– While work is ongoing to clean-up some remaining dollars and to put the government on sound footing to stay current, the authority has resolved 90 to 95 percent of its seriously delinquent government accounts-receivable balances.
– We have replenished our debt service reserve fund with cash (a requirement to maintain our long-term debt or bonds).
– We have far exceeded our debt service ratio (another requirement to maintain our long-term debt).
– We have launched and virtually completed our long-overdue "triennial report" (another requirement to maintain our long-term debt).
– We have received an "unqualified," or favorable, audit from our external auditors, which is critical to our ability to raise future long-term debt to repair our infrastructure and improve system reliability.
– We have launched a new long-term debt (bond) campaign to repair our infrastructure and improve system reliability.
– We have launched a new rate case effort to fund the new long-term debt (bond) campaign.
– We have managed the authority to a zero rate increase for the current fiscal year.
– We have launched efforts to better control our consumption of authority assets via procurement, inventory control, theft of company property, line loss and other efforts.
In short, our financial accomplishments in the last 12 months have been substantial, and the authority is financially stronger and better positioned for the future than at any other time in its recent history.
With respect to authority operational matters:
While we clearly have a long way to go, we have made substantive progress in operating activities in the following areas:
– We completed our first comprehensive 10-year capital improvement plan to better organize our thinking in terms of our short-, medium- and long-term capital project requirements for operations.
– We made the necessary progress in the financial area to fund our short-, medium- and long-term capital project requirements.
– After a considerable amount of time and effort, it appears that Unit 22 is now dependably operational on St. Thomas.
– Major unit O& M projects are in process or completed at the Richmond and Krum Bay facilities (i.e., boilers, generating units, high yard insulators, etc.)
– We completed five major underground projects on St. Croix and St. Thomas.
– We virtually solved the water quantity problem on St. John with a larger intake pipe. The water quality problem is our next hurdle, and we have developed intermediate and long-term production and storage solutions to address the water-quality issue.
– We launched preventative maintenance groups to anticipate problems in our plant and in our operating system that may create extended outages.
– We launched a comprehensive operational efficiency effort which has resulted in a major water-leak detection and repair effort and some developing plans to improve our electrical loss.
– We allocated funding and completed plans for our long-awaited plant operator training and certification curriculum.
– We began our enhancement of the customer service function by boosting the monthly training regimen and providing more information to employees on bill structure and purpose. More comprehensive training is planned.
– We launched the first phase of the key accounts program, which has produced two large contracts and has resulted in major progress in working with government accounts. Program design is ongoing.
– We began the process of identifying and solving the concerns of the authoritys project engineering group.
– We began revamping the meter reading routes so that they can be read by fewer readers in less time so that associated personnel can be reassigned to more needy areas of the authority.
While there are many more noteworthy operating accomplishments, the above list gives us all a sense of the progress folks in the plant, line and customer service ends of business have achieved.
WAPA personnel matters
With respect to our employee matters:
In spite of the March 26 employee action, I think we have made some significant progress in improving the working relationship we have with each other and the respect we afford each other. We believe this is the first time WAPA has negotiated its supervisors' contract with the Virgin Islands workers union without going to arbitration. Most authority employees seem to realize that we are "all in this thing together," and that for things to improve, we must expect more from each other at the same time we are understanding of the hurdles we must all overcome to improve.
While there is certainly room for improvement, our meetings to introduce the authority's management team, celebrate employee achievements on all islands (at Christmas) and celebrate WAPA Day all seem to have been well received. The authoritys communications committee is in its sixth month of operation, and it (along with the specific event committees) has played an important role in the success we have experienced at the employee gatherings. We have also had a
series of employee/management meetings which were very constructive.
The authority's employee matters are long entrenched and somewhat complicated. The vast majority of the authority's employees are hard-working, committed people and have been adapting well to the changes being implemented. Others have had more difficulty. For some, change creates a significant amount of fear. Some fear that their long-standing issues will remain unresolved. Others fear that certain changes may require greater personal accountability and adherence to authority policy. Still others, who have been taking unfair advantage of the authority, may fear the loss of that advantage, whatever it may be.
Overall, however, I have the greatest respect for the employees at the authority. They have done more with less than any group I have ever worked with. This is a group of employees which has lead the Caribbean in price and quality of service with equipment which for many years had been starved for maintenance, computerization, communication and other technological advances.
So, if things are going so well, why has there been so much WAPA-related excitement in recent weeks? As you know, I have been recently subjected to a venomous barrage of accusations and attempts to smear my reputation in the name of improving the authority. Doesn't it appear a bit strange that a guy whose brief management tenure has overseen such a period of improvement would be targeted for such a difficult time from so many?
What could be the motive for such attacks, particularly since the accusations are fundamentally untrue? For the record, I did not deliberately violate company policy. I did not participate in any gross or deliberate misuse of authority funds. I have not sought to be disrespectful to authority employees. I believe these accusations to be a distraction and not the central matter, however.
I must tell you, senators, that I was befuddled for a while by this apparent contradiction, until I realized that the only thing that could produce such extreme reactions like the ones I have seen in recent weeks is fear. Change can be frightening to some and can result in a great deal of resistance. I believe that fear has played a role in recent authority events-fear of change.
One employee described the emotion some have recently displayed as a clash between the stateside private business culture from which I come and the Virgin Islands governmental culture in parts of WAPA. I think there is something to what he said. The problem is that the competition that WAPA faces has a culture more like the one I came from than the one some employees have at the authority.
If the authority does not raise its level of performance, it is likely to be taken over by a private firm which will raise the utility's performance. If they think we are having a culture clash now, just wait. The very folks who represented their opposition to an SEI takeover, for example, are, by weakening authority management, virtually handing the authority over to third-party ownership. (See Aug. 12, 2000, story "Southern defeated".) If that should occur, the changes will be stark, and many will lose their jobs.
When I arrived at the authority about this time last year, I was told that the Virgin Islands wanted its utility to be a first-class electric and water provider. I understood this goal to be set for two important reasons:
– To improve the quality of life of our citizens.
– To improve the economic development outlook for existing and potential new businesses, as a way to provide more revenue to our government and productive careers at home for our youth.
I don't think the goal or reasons for that goal have changed. I think what has happened is that the realization may be setting in with some that, in order to accomplish the goal, we will have to do things differently than we have done them before. Those who have been asking for my removal are absolutely correct in assuming that my leadership results in a tighter and better-run operation. The thing that may have been missed, however, is that such an operation is a "good thing."
A well-run utility can be a great place to work. The technology is state-of the-art, the training distinguishes the employee and the reliability attracts new business. If the Virgin Islands is to achieve the status many of us want it to achieve, it must have a strong, well-run and reliable utility — like the one we have been on track to build.
As I am leaving the authority as of Monday, May 6, 2002, I wish the authority and the citizens of the Virgin Islands the best in achieving the goals they seek.
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