ST. CROIX — The governing board of the Virgin Islands Water and Power Authority approved a motion during a meeting today for its members to meet with VI Electron to resolve pending outstanding items to finalize a battery lease agreement for the solar farm in Estate Petronella on St. Croix’s East End.
Additionally, the board approved multiple contract cost increases and extensions, and the short-term extension of maturing bond anticipation notes. The board also extended WAPA’s fiscal year 2024 budget through July 31 in addition to electing new board officers.
The board members and WAPA personnel participated in the meeting via video conference between the authority’s boardrooms in both island districts, with some board members and personnel participating virtually.
Andrew Smith, the authority’s outgoing chief executive officer and executive director who has resigned, noted a back-and-forth discussion between WAPA and VI Electron while virtually participating in his final board meeting. He said a couple different iterations of a 25-year battery lease contract have been generated, but noted some items agreed to verbally have not yet been put into writing.
Smith said WAPA would pay a monthly payment to lease the batteries, adding that the authority would have full control and discretion how it chooses to use the batteries.
“However, there's also in the contract an additional energy charge for energy that comes out of those batteries,” he said.
VI Electron verbally proposed reducing that charge by 50%, Smith said.
“So, energy that comes out of the battery, in addition to the monthly lease payment of $67,756, we would pay a fixed rate for energy that comes out of the battery,” he said.
Kyle Fleming, Virgin Islands Energy Office director, who chaired the meeting up until it was time to elect new officers, asked for a motion to approve the battery lease agreement as presented. His request led the board members into a debate. He said the project is nearing completion, pointing out that there is a desire to see renewable projects be available in the territory. He said he sought to expedite a project that seems in grasp.
Maurice Muia, a board member, did not support the idea of approving the contract at this time.
“In all good faith, we as the board cannot approve something if it is not to a stage where we agree with the terms,” he said.
Muia questioned the language in the proposed lease requiring WAPA to pay for energy that comes out of the batteries in addition to the monthly lease rate.
“Why would we pay for something twice?” he asked.
The board ultimately voted 3 to 3 on a motion to accept the lease as presented, so the motion failed. Muia voted against it along with Hubert Turnbull and Juanita Young. The motion was supported by Fleming, Lionel Selwood Jr., and Cheryl Boynes-Jackson.
The board then approved a motion calling for its members to have a discussion with VI Electron to iron out the pending outstanding items in the contract. The motion passed by a 4 to 1 vote, with Fleming voting against it. Boynes-Jackson, who participated virtually, lost connection during the vote. It was approved by Muia, Turnbull, Young, and Selwood.
The board approved the first addendum to its contract with Wartsila at the Randolph Harley Power Plant on St. Thomas for a not-to-exceed cost increase of $10,804,258 and a time extension to May 31, 2025 from December 31, increasing the contract cost to $85,947,276 from $75,143,018.
Chavante Marsh, WAPA director of Project Management, while speaking on the project during the meeting, said the project completion date is December 31. She said the contract extension to May 31, 2025 will ensure Wartsila is available to fix any issues that might come up when the four new generators come online. She said completion of the Wartsila project will result in reliable power and reduced outages.
WAPA hopes to seek reimbursement of about $5 million from change orders through the U.S. Department of Housing and Urban Development to cover the cost increase in addition to using internal funds to make up balance.
The board approved a not-to-exceed cost increase of $343,927 and an extension of the project deadline to June 30, 2025 for a contract with Exsol Group to provide a dedicated liquefied petroleum gas (propane) source to the new Wartsila generators, bringing the project cost to $1,860,550.
“One of the critical things to note is that having a reliable LPG fuel source is very imperative to the reliability and efficiency of the plant and has a high significant financial impact to the overall operations,” Marsh said, adding that the cost increase is due to the escalating price of materials, shipping, and labor.
The board approved a not-to-exceed time extension of one year to May 31, 2025 and a proposed cost increase of $21,392 to utilize Upright Fire Protection as the original equipment manufacturer representative for a fire pump house in the Randolph Harley Power Plant on St. Thomas that is part of a fire suppression system. The updated cost of the HUD-funded project is $977,762.
Marsh said all generating units must have a fire suppression system consisting of a primary electric fire water pump and a diesel-engine-driven pump as backup. She said the requested year-long extension and cost increase are necessary for the completion, close out, and final payments of the project. She said the previously-contracted OEM is no longer in business, so the cost increase is attributed to updating the travel and accommodation expenses for a new OEM representative in addition to the complexity of work required since the pump has been offline since 2017.
“For those who may not be familiar, an OEM representative is a person who acts as the liaison between the OEM and the end users, which will ensure that the equipment is safe to energize before we put it into operation,” Marsh said.
The board approved the short-term extension of maturing bond anticipation notes.
Lorraine Kelly, WAPA interim chief financial officer, said the authority has received the term sheets for 2022 A and B bond anticipation notes.
“The term sheets currently are for an extension that allows the current July 1 BANs to be extended through August 1,” she said, adding the extension would assist WAPA with its outgoing and potentially incoming CEO. “We have done this in a manner such that there are actually two extensions.”
Kelly said there is an extension through Monday, adding WAPA must make a $268,000 deposit with the trustee for the prepayment of interest for a one-month period. She said a second extension will take WAPA to August 1.
“This is a no-cost extension, so there are no costs being charged by either our credit facilities and/or the debtor, and there are no costs for legal services either,” she said. “The intention is for us to spend the month negotiating further, and we have had considerable negotiations in the last month, and the intention is for us to look at a term sheet and for us to utilize the one month to do so.”
Furthermore, Kelly said WAPA would like to defer the board’s approval of the authority’s annual budget by one month, so she requested to work under the existing budget for another month. The board approved a motion to extend WAPA’s fiscal year 2024 budget through July 31.
The board approved to amend a contract for debris removal with Haugland Energy in the amount of $8,834,139.02 to increase the quantity of debris to be removed, as well as to extend the contract until March 8, 2025.
The board elected new officers, including chair, vice chair and secretary. The board elected Turnbull as chair, Muia as vice chair, and Young to continue serving as secretary for another term. Turnbull, in his capacity as the board’s new chair, appointed Fleming, the outgoing board chair, as chair of the Planning Committee. Turnbull appointed Young as chair of the Finance Committee.
