April 28, 2005 With fuel prices soaring higher than any time in history and no end to the fluctuation in sight, the V.I. Water and Power Authority took matters into its own hands Wednesday.
Members of WAPA's governing board approved a resolution during executive session that they hope will lessen the utility's dependence on oil. The board hopes to bring relief from the ever-increasing electric rates to the territory's ratepayers. However, that relief is more than likely a year or two away.
The resolution authorizes WAPA to purchase power on a short-term basis from one or more of four alternative power-producing companies. Three of the companies St. Croix Renaissance Group, Caribbean Energy Resources Corporation (CERC) and Caribe Waste Technologies (CWT) have all been certified by the Public Services Commission to operate as small power producers in the territory. The fourth company West Indies Limited has recently applied to the PSC to be considered as a small power producer but has not yet received word from the commission on the matter.
The resolution may not be as simple as WAPA hopes, however.
At an informal press briefing Thursday, WAPA Executive Director Alberto Bruno-Vega said the rising oil prices necessitated the move to purchase alternative forms of power.
"We're suffering from fuel dependency and need relief," Bruno-Vega said. "The governing board has decided to push full steam for the short term."
The case for alternative power goes back to 2002, when oil prices seemed reasonable and WAPA opposed entering into agreements with any small power producers. CWT was certified as a small power producer in July of that year and planned to convert the territory's solid waste to energy through a process called gasification. The company tried unsuccessfully to have the PSC force WAPA to purchase power from it.
CWT claimed that a purchase-power agreement with the utility was needed for the company to begin operations. But WAPA would have nothing to do with the idea, saying it was not needed or wanted at the time. (See WAPA Board Balks at Push for Talks with CWT.)
CERC followed in 2003 with a similar situation as CWT, and once again WAPA viewed their plans with skepticism. (See Privately Backed Generator Pitched to WAPA.)
After years of steadfastly opposing attempts to get the utility to purchase alternative sources of power, WAPA is ready to give in.
WAPA sought to purchase alternate sources of power in September of 2004, when oil prices were hovering around $40 a barrel, and had sent out several requests for proposals (RFPs) to various power-producers in hopes of getting a low-priced contract.
The publicly owned utility got tied in a web of bureaucracy, politics and court cases, however, pushing it further from its new goal of using alternative power sources by the end of 2005.
The PSC presented a major challenge, banning WAPA from continuing with the competitive bidding process and limiting the utility to negotiate only with companies certified by the commission. At the time, only CERC and CWT were qualified as small producers. St. Croix Renaissance was certified in November of 2004.
WAPA appealed the PSC's decision, like it had on several of the previous attempts to get the authority to purchase alternative sources of power. (See Legal Battle Between WAPA and PSC Gets Expedited.)
WAPA was also sued by CERC.
"We are still pursuing our right in the case that is pending in Superior Court to send our RFPs as required in the competitive bidding process," Bruno-Vega said.
With the price of fuel breaking records, Bruno-Vega said WAPA has to act in the interim while it waits for the RFP matter to resolve in court.
Bruno-Vega said 50 percent of the fuel used in power plants on the mainland comes from the burning of coal. He said he would much rather depend on the United States for an energy source than to depend on Middle Eastern sources of fuel.
"The United States has more coal than Saudi Arabia has oil," Bruno-Vega said.
Although it has not notified the PSC about its decision, WAPA will begin negotiations with the four companies by Friday, Bruno-Vega said. He said WAPA is seeking to purchase 20 megawatts of power during the day, 8 megawatts of power during the night and 1 million gallons of water daily. Bruno-Vega said the power could be purchased from one or more of the companies, depending on how soon the companies can supply the needed power to WAPA at a reasonable cost.
"From our perspective, we wish it could happen tomorrow," Bruno-Vega said of the purchase agreement. "The sooner, the better."
Bruno-Vega said WAPA wants to have the agreement in place within the next year or two and would keep the contract until a long-term agreement is approved by the PSC. He said the PSC should have no "discrepancies" with the interim agreement because WAPA is operating under the local Public Utilities Regulatory Policies Act and is keeping negotiations only with companies certified by the PSC.
However, only one company is prepared to supply power relatively soon St. Croix Renaissance Group. The Renaissance Group is the only company that already has facilities in the territory, having bought the former St. Croix Alumina Plant in 2002. The company plans to burn coal to generate electricity. (See Renaissance Certified by PSC as Potential Supplier.)
"The entire community is hurting; WAPA is hurting because of the high fuel costs," Bruno-Vega said. "Time is slipping. We need some quick relief from the skyrocketing fuel costs."
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