Home News Local news PSC Meets, Greets, Grills WAPA's Hodge

PSC Meets, Greets, Grills WAPA's Hodge

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Jan. 24, 2008 — Meeting new Water and Power Authority Executive Director Hugo Hodge Jr. for the first time at their hearing on St. Croix Thursday, the Public Services Commission first welcomed Hodge, then grilled him and his staff on what WAPA is doing to pay the PSC's assessments, address high energy costs, power outages and other issues.
Claudius F. Moore, the PSC's accounts maintenance officer, read out the list of special assessments against WAPA. After saying he believed the deadline for payment was the end of February, Hodge expressed some alarm at the amounts being assessed.
"We are up to almost $1.4 million for fiscal year 2008 and we are still in January with almost five months to go," Hodge said. "I'd like to comment it is the same rate-payers you and I are trying to protect that are bearing the burden of this."
PSC Chairman Joseph Boschulte said $305,000 of that total was carried over from the previous year and is now more than 11 months past due. He asked Hodge to make payment as soon as possible.
Reporting on the status of power generation, WAPA chief operating officer Glenn Rothgeb said two generators are out of service. St. Croix unit 22 is repaired and should be up and running in the next few days, and unit 20 is awaiting parts and should be up next month, he said.
"Unit 20 being down until next month, is that the cause of the power outages we've been having lately?" asked PSC commissioner Sirri Hamad.
"No, that was a switching problem on unit 17," Rothgeb said. "Really, the problem is the tradeoff between reliability and efficiency. With the oil prices recently, we were running much tighter than the norm. We were only running three units, so with very little spinning reserve, if something trips, there is a higher likelihood of something more happening."
If you run fewer units with a higher load, you burn fuel more efficiently but you have a higher risk of an outage, Rothgeb said.
Boschulte asked what could be done to cut oil consumption.
"The major contributor to lessening oil consumption will be the St. Croix waste heat recovery boiler, which is still on schedule for completion in September," Hodge said.
Getting the St. Thomas waste heat recovery boiler back online is the next step to cutting oil consumption, he said.
"We've just started that on St. Thomas, though we still have something of a funding problem with that," Hodge said.
WAPA estimates the total cost for the new St. Croix steam-recovery generator at about $34 million. WAPA customers will pay a surcharge which, for typical residential use of about 500 kilowatt hours, should amount to about one dollar a month. That charge begins in October, around the time the generator is supposed to come online. Customer bills should go down significantly as soon as it becomes active.
If oil prices remain above $60 a barrel, the increase in efficiency would save WAPA $12 to $15 million a year on St. Croix. That amounts to an average savings of $240 to $300 per year for every household electrical-service account in the territory. Bringing the St. Thomas boiler online would essentially double those savings.
PSC commissioner Donald "Ducks" Cole said he'd like to see pictures of the work being done; WAPA spokeswoman Cassandra Dunn suggested the PSC come as a group to see directly.
"We have to be careful if we are talking about a visit with all of us," said PSC commissioner Alecia Wells. "According to the media, they could say if there are four of us, it constitutes a quorum and we are having a meeting."
WAPA's fuel price hedging program came under scrutiny as well. The PSC approved a pilot hedging program in 2006 and approved a full scale program last fall. It protects against sudden sharp jumps in fuel prices through a complex hedging agreement, so that if oil prices shoot up beyond a certain point, the company offering the hedging agreement pays the difference, but if oil prices go down a lot, WAPA pays the savings to the hedge fund company.
Although approved, the full scale program has not taken effect yet. Nellon Bowry, WAPA chief financial officer, said there had been a "technical glitch" causing some delay. WAPA's governing board had given approval to a tax-exempt transaction, but WAPA's lawyers said the transaction could not be tax exempt, so the governing board had to officially approve a new transaction. They expect to get approval to move forward at the WAPA governing board meeting next Thursday, Bowry said.
"Of late the fuel prices have been backing off a little, so the environment (for benefiting from hedging) is firming up too," he said.
Boschulte said the program was taking too long to implement.
"I still have concerns whether the agency is prepared to execute this program," Boschulte responded. "When you have hiccups like this, it doesn’t help me feel better that the entity is ready to go forward. You got approval months ago and we are still not ready to go."
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